Civil asset recovery
Parallel proceedingsIs there any restriction on civil proceedings progressing in parallel with, or in advance of, criminal proceedings concerning the same subject matter?
According to the law, in the event that a crime has caused damage, the ‘person injured by the crime’ is entitled to bring a civil action for restitution and damages not only before a civil court, but also by ‘standing as a civil party’ in a criminal proceeding.
There is no express restriction on civil proceedings progressing in parallel with, or in advance of, criminal proceedings concerning the same subject matter, with the exception that if the civil action is brought after the issuance of the criminal decision of first instance, the civil proceeding is suspended until the issuance of the final decision (article 75(3) of the Code of Criminal Procedure).
Even if the main principle governing relations between criminal and civil proceedings on the same subject matter is the one of autonomy, some exceptions do apply. In particular, the final criminal decision of conviction (issued after a full trial) has the effect of res judicata in a civil proceeding for restitution and damages (regarding the assessment of the main elements of the unlawful conduct; article 651 of the Code of Criminal Procedure).
However, a final criminal decision of acquittal does not have the effect of res judicata in a civil proceeding, if the civil action was brought before the civil court in a timely manner (article 652 of the Code of Criminal Procedure).
ForumIn which court should proceedings be brought?
The relevant criteria for the geographical competence of civil courts are provided for by the Code of Civil Procedure. For ordinary proceedings, the court of the place where the defendant has his or her residence, domicile or abode is competent. In the absence of a residence, domicile or abode in Italy, the court of the place of residence of the claimant is competent (article 18).
For legal entities, the court of the place where the entity or defendant has its legal seat or, alternatively, where it has a place of business and a representative authorised to stand trial, is competent (article 19).
For actions relating to civil obligations, an alternative criterion provides additionally for the competence of the court where the obligation arose or must be carried out (article 20).
For the enforcement or execution on movable goods or real property, the court of the place where the goods are located is competent (article 26).
With respect to interim measures (temporary seizure of goods or properties of the defendant, etc), proceedings should be brought in the court competent to decide the merits of the case or, in its absence, the court of the place where the interim measure should be executed (article 669-ter).
LimitationWhat are the time limits for starting civil court proceedings?
In the event of damage deriving from a crime, the ‘fact constituting crime’ is considered to represent a ‘civil tort’ as well, with significant consequences on the statute of limitations period concerning the civil action for damages.
According to civil law, such a statute of limitations period is ordinarily five years from the moment of the civil tort. However, if the fact represents a criminal offence as well, and the statute of limitations for the criminal offence is longer, then the longer criminal statute of limitations period applies (article 2947 of the Italian Civil Code).
In addition, if the civil action is brought during the longer criminal statute of limitations period, this qualifies as an interruption of the civil statute of limitations, and the original five-year period provided for by the civil law starts running again from the moment the decision on the criminal proceeding becomes final.
JurisdictionIn what circumstances does the civil court have jurisdiction? How can a defendant challenge jurisdiction?
The relevant criteria for the jurisdiction of civil courts are provided for by Law No. 218 of 31 May 1995 (the Law on Private International Law). According to article 3, Italian jurisdiction exists when the defendant is domiciled or resident in Italy, or when he or she has a representative in Italy authorised to stand trial. Additionally, article 3 provides that Italian jurisdiction also exists when the criteria laid down by the Brussels Convention of 27 September 1968 are met.
With respect to interim measures, article 10 of the Law on Private International Law provides that Italian jurisdiction exists when the interim measure should be executed in Italy or when the Italian court has jurisdiction on the merits of the case.
The lack of jurisdiction should be objected to by the defendant in his or her first brief of defence, to be filed at least 20 days before the first hearing. When this condition is met, the lack of jurisdiction can then be assessed in every stage and instance of the proceeding (articles 4 and 11 of the Law on Private International Law). In relation to proceedings in absentia, or when Italian jurisdiction is excluded by international provisions or by the fact that the action concerns real property located abroad, the lack of jurisdiction can be assessed ex officio by the court.
Time frameWhat is the usual time frame for a claim to reach trial?
A claim can reach the first trial hearing rather quickly, namely within 90 days if the defendant is a resident of Italy, or within 150 days if the defendant has his or her residence abroad. However, the length of civil trials is usually significant, between three and four years at least for a decision in first instance, and six to seven years or more for a final decision (after a possible second instance decision before an appellate court, and a third instance decision before the Court of Cassation).
Admissibility of evidenceWhat rules apply to the admissibility of evidence in civil proceedings?
Discovery as known in common law jurisdictions is not provided for by the Italian legal system; accordingly, parties have no duty of disclosure unless the court so orders.
According to the main legal principle on the burden of proof, anyone who claims a certain right or entitlement must prove the underlying facts and the grounds for it; in turn, anyone who objects to the mentioned right or entitlement must prove the facts on which the objection is based (article 2697 of the Civil Code). The taking of evidence (interrogatories, testimonies, technical expertise, etc) is carried out within the trial, and is governed by the court mainly on the request of the parties. With respect to documentary evidence, parties may produce all documents that, in their view, prove the grounds of their claim. With regard to oral evidence, however, prior authorisation by the court is required.
With a few exceptions, the court can evaluate any evidence at its discretion (article 116 of the Code of Civil Procedure), but has to provide the reasons for such evaluation in the written grounds of the judgment. The decision of the court must be based on the evidence submitted by the parties and, in addition, on the facts not specifically challenged and on the factual notions of common knowledge (article 115 of the Code of Civil Procedure).
WitnessesWhat powers are available to compel witnesses to give evidence?
Witnesses have a duty to appear to give evidence, except in the event of a legitimate impediment (owing to health or other reasons). If they do not appear without a justified reason, they can be sanctioned and compelled to appear by the police, further to a court order.
Publicly available informationWhat sources of information about assets are publicly available?
The main sources of publicly available information about assets concern real estate and land, vehicles and companies.
In addition, under certain conditions, data concerning the taxable income of a certain taxpayer (ie, yearly tax returns) can also be obtained.
With respect to real estate and land, the most relevant public source is the archive of real estate registers. This archive, which constitutes the local agencies of the Ministry of Economy and Finance, allows all entries made in the register concerning real estate in Italy to be identified in relation to the name of a certain individual or entity (an entry determines the ownership of relevant real estate with regard to third parties and mortgages, etc, which are recorded in the register).
As far as vehicles are concerned, the relevant register is the public register of vehicles, where all relevant information concerning a certain vehicle and its owner (name, surname, date of birth, address and domicile, existence of mortgages, etc) is recorded.
With respect to companies, information can be obtained from the register of enterprises that records the most relevant information about a company (deed of incorporation, by-laws, data about shareholders, directors, etc, and balance sheets).
Finally, according to the law, the relevant tax returns of a certain taxpayer may be obtained, further to a grounded request to the competent tax authority, if the applicant can prove to have a concrete and qualified interest to obtain them (article 24(7) of Law No. 241/1990, governing the ‘transparency’ of public administration activity and relevant acts). In general terms, this criterion is considered fulfilled when obtaining the relevant document (ie, the tax returns) is ‘necessary to protect its own juridical interest’. In the event of denial, an appeal can be made to the competent administrative court (the TAR, which on a number of occasions has granted the release of tax returns).
Cooperation with law enforcement agenciesCan information and evidence be obtained from law enforcement and regulatory agencies for use in civil proceedings?
From a practical point of view, the most efficient way for a defrauded party to obtain information and evidence from law enforcement and regulatory agencies for use in a civil proceeding is to file a criminal complaint, and at the end of a criminal investigation by accessing the ‘public prosecutor file’ (containing all acts carried out and evidence gathered by the public prosecutor in the course of the investigations, including information and documentation mentioned above). In compliance with case law, such a request is usually granted.
In the event the criminal route mentioned above is not pursued, information and evidence can be directly requested from law enforcement and regulatory agencies, in accordance with certain criteria and conditions (concrete and qualified interest to obtain such information, because it is ‘necessary to protect its own juridical interest’). However, such requests are often not granted, owing to the concurring needs of the relevant office or regulator (investigations still pending, duty of confidentiality, etc).
In the course of a civil trial, the court, on request of a party, can order a third person (including law enforcement and regulatory agencies) to produce documents or other things that it considers necessary to decide the case (article 210 et seq of the Code of Civil Procedure). A party cannot request the court to order a third person to disclose a certain document possessed by it, unless there is no way for the party to obtain it directly.
Third-party disclosureHow can information be obtained from third parties not suspected of wrongdoing?
See question 9. The treatment of banking information is protected by strict rules, which generally prevent any disclosure, with the exception of criminal investigations, tax assessments and anti-money laundering compliance. The Italian Data Protection Authority, on 25 October 2007, issued the Guidelines for the Processing of Customers’ Data in the Banking Sector, which expressly provide strict rules for banks and other financial intermediaries about disclosing information in their possession to third parties, and even to the interested party if he or she is the owner of the account; see article 119 of the Consolidated Banking Law.
Interim reliefWhat interim relief is available pre-judgment to prevent the dissipation of assets by, and to obtain information from, those suspected of involvement in the fraud?
To prevent the dissipation of assets by the suspects of fraud (ie, any circumstances where there is a material risk of dissipation), the law provides for ‘conservative seizure’ that can be requested by the claimant and ordered by the court on the suspects’ assets also at the pretrial stage (articles 669-bis et seq and 671 et seq of the Code of Civil Procedure).
In terms of procedure, the seizure order can be issued ex parte where knowledge by the target could prejudice the successful execution of the order; in that scenario, a hearing is subsequently fixed within 15 days, where the target is entitled to raise his or her defence and the order is subject to confirmation, amendment or revocation by the court. Otherwise, the court decides on the application for conservative seizure after a hearing where all relevant parties are entitled to make their representations (article 669-sexies).
The subject of the seizure order can be movable goods, or real estate or rights of third persons. Usually the order is issued not in relation to specific assets to be seized, but with the indication of a maximum amount to be subject to seizure, with the consequence that the claimant will have to trace the assets on which to carry out the enforcement of the order.
As far as the substantive requirements for conservative seizure are concerned, they are represented by the fumus boni iuris and periculum in mora. The first is prima facie evidence of the existence of the right that the seizure order is aimed at protecting; the second is the serious and concrete risk that delay could compromise the satisfaction of the right.
Conservative seizure is instrumental to a full trial on the merits, aimed at assessing the existence of the right claimed, whose sentence could then be enforced by targeting the assets subject to conservative seizure. However, conservative seizure can also be granted during the trial stage, and after a judgment on the merits, on condition that the requirements mentioned above are fulfilled.
With respect to interim relief concerning the obtaining of information, the law provides that, on request of a party, the court can order pretrial taking of testimonies when there is a serious risk that they may become unavailable during the trial, and that these testimonies could be considered necessary for a future trial. If the court grants the application, by the same order it fixes the hearing for the taking of evidence (article 692 et seq of the Code of Civil Procedure).
Non-compliance with court ordersHow do courts punish failure to comply with court orders?
Intentional failure to comply with court orders is punished, under certain conditions, as a criminal offence under article 388 of the Criminal Code, provided that a criminal complaint is filed by the interested party. The punishment is imprisonment for up to three years, or alternatively a fine, and the prohibited conduct is that of non-compliance with a court order, in addition to carrying out sham transactions or other fraudulent acts on his or her own or other assets with the purpose of avoiding compliance with the order.
With respect to the civil procedure for ensuring the enforcement of court orders, it is provided for by Book Three of the Code of Civil Procedure (articles 474 to 632). See questions 18 and 19.
Obtaining evidence from other jurisdictionsHow can information be obtained through courts in other jurisdictions to assist in the civil proceedings?
Judicial cooperation in civil matters is mainly governed by European Commission (EC) legislation (with respect to EU countries) and the international conventions signed by Italy, although domestic law has a residual function to supplement and regulate the aspects not regulated by the above-mentioned legislation.
With respect to all EU countries (except Denmark), the requests by Italian courts for the taking of evidence in a foreign state are governed by Regulation (EC) No. 1206/2001. The requests must be submitted by courts (not by private parties) using the forms contained in the annex to the Regulation, and in compliance with the provisions of the same Regulation. In particular, the taking of evidence should be executed expeditiously (ordinarily, within 90 days); refusal should be confined to exceptional situations, and if a special procedure is requested in accordance with the law of the requesting state, the requested court shall comply with such a requirement unless this procedure is incompatible with its own law (article 10). In addition, the Regulation provides that requests shall be transmitted directly from the ‘requesting court’ to the competent ‘requested court’ of the foreign state (article 2); that the presence and participation in the foreign state of the relevant parties and of representatives of the requesting court can be allowed (articles 11 and 12); and even that the direct taking of evidence by the requesting court can take place under certain conditions (article 17).
As far as non-EU countries are concerned, the most relevant international convention is the 1970 Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters (the 1970 Convention), which entered into force in Italy as of 21 August 1982, and is currently in force in 57 states. In accordance with the 1970 Convention, the requests to obtain evidence (or to perform some other judicial act) shall be made by means of a letter or request (article 1); shall be sent to the central authority of the foreign state designated for that purpose (article 2; in Italy, the Minister of Foreign Affairs); and shall be executed in accordance with the law of the requested state, unless the special method or procedure requested by the requesting state is not compatible with the internal law of the state of execution (article 9). The presence of the parties, their representatives and members of the requesting judicial authority can be allowed (articles 7 and 8), as well as the direct taking of evidence in the foreign state through a commissioner duly appointed for the purpose under certain conditions (article 17).
For states that are not signatories of the 1970 Convention, where a bilateral treaty with Italy exists (Italy is a signatory of many such treaties), this will regulate the obtaining of evidence by Italian civil courts.
In the absence of an applicable treaty, Italian domestic law will apply, whose main provision prescribes that ‘rogatories of Italian judges to foreign authorities for the execution of orders on the taking of evidence shall be transmitted through diplomatic channels’ (namely the Minister for Foreign Affairs, and the relevant diplomatic representatives in the foreign country, article 204 of the Code of Civil Procedure).
Assisting courts in other jurisdictionsWhat assistance will the civil court give in connection with civil asset recovery proceedings in other jurisdictions?
With respect to foreign requests to take evidence in Italy and enforce foreign judgments, the most relevant provisions are of EC legislation (with respect to EU countries) and of the international conventions signed by Italy, although Italian domestic law ordinarily applies only in order to supplement and regulate the aspects not regulated by this legislation (see question 13).
Foreign requests to take evidence in ItalyThe most relevant domestic provision in this respect is article 69 of the Law on Private International Law, which states the following:
Enforcement of foreign judgments(1) The judgments and the orders of foreign judges concerning examination of witnesses, technical assessments, swearing or other means of evidence to be taken in the Italian Republic are made executed by decree of the Court of Appeal of the place where such acts have to be taken [. . .].
(2) [. . .] If the request is made by the judge itself, the request has to be made through diplomatic channels [. . .].
(3) The court decides in chambers and, in the event it grants the execution, sends the acts to the competent judge.
(4) The taking of evidence or the execution of other evidentiary acts not provided for by the Italian law can be ordered on condition that they do not conflict with the principles of the Italian system.
(5) The taking of evidence or the execution requested is regulated by the Italian law. However, the forms expressly requested by the foreign authority are complied with on condition that they do not conflict with the principles of the Italian system.
With respect to EU countries (except Denmark), the enforcement of foreign judgments is governed by Regulation (EC) No. 44/2001. Its basic principle is that the procedure for making a judgment given in one member state enforceable in another must be as efficient and rapid as possible; as a consequence, the declaration that a judgment is enforceable is issued virtually automatically by the court of the requested state (for Italy, the court of appeal of the place of execution), after purely formal checks of the documentation supplied (article 33 et seq). However, in an adversarial procedure the defendant is entitled to appeal against the declaration of enforceability, where he or she considers one of the grounds for non-enforcement to be present.
In addition, Regulation (EC) No. 805/2004 provides for the abolition of the exequatur procedure, and the creation of a European enforcement order for ‘uncontested claims’ (namely, all situations in which a creditor, given the verified absence of any dispute by the debtor as to the nature or extent of a pecuniary claim, has obtained either a court decision against that debtor or an enforceable document that requires the debtor’s express consent, such as a court settlement or an authentic instrument). According to this Regulation, such a procedure offers ‘significant advantages’ as compared with the exequatur procedure provided for by Regulation (EC) No. 44/2001, ‘in that there is no need for approval by the judiciary in a second member state with the delays and expenses that this entails’.
As far as non-EU countries are concerned, the enforcement of foreign judgments is dealt with by a number of bilateral treaties signed by Italy, which regulate the requirements. In the absence of an applicable treaty, and in order to supplement EC and international legislation where necessary, Italian domestic law applies, whose main provisions are the ones laid down by articles 64 and 67 of the Law on Private International Law.
In particular, article 67 provides that an Italian civil proceeding aimed at the formal recognition of a foreign judgment before the court of appeal of the place of execution, is necessary only in case of a challenge to the recognition, or where forced enforcement of the foreign judgment is required.
However, where there is no challenge to the recognition or where no enforcement is required, foreign judgments are recognised in the Italian legal system without the need for a specific civil proceeding, on condition that the following requirements are fulfilled (article 64):
- the judgment was issued by a judge who had jurisdiction according to the principles on jurisdiction of the Italian legal system;
- the writ of summons was brought to the knowledge of the defendant according to the procedural rules of the lex fori, and the defendant’s fundamental rights of defence were not breached;
- the parties had regular standing in trial according to the lex fori, or ‘default of appearance’ was declared in accordance with that law;
- the judgment has become res judicata according to the lex fori;
- the judgment does not conflict with another judgment issued by an Italian judge that has become res judicata;
- there is no pending proceeding before an Italian judge on the same subject and between the same parties that started prior to the foreign proceeding; and
- the judgment does not produce effects contrary to Italian public order.
What are the main causes of action in civil asset recovery cases, and do they include proprietary claims?
The main cause of action in civil asset recovery cases is civil tort, defined by the law as ‘any fact intentional or negligent, which causes unlawful damage to others’, and that obliges the perpetrator to pay damages (article 2043 of the Civil Code). Often, the cause of action may concur with that of breach of contract (article 1218 et seq of the Civil Code), and the two actions may also be exercised in parallel.
Proprietary claims have a limited relevance in the typical scenario of fraudulent behaviours affecting money or other fungible goods.
RemediesWhat remedies are available in a civil recovery action?
The typical remedy is restitution (where possible) and damages. For the enforcement of a successful judgment providing for restitution and damages, see question 19.
Judgment without full trialCan a victim obtain a judgment without the need for a full trial?
Law No. 69/2009 has introduced a summary proceeding (article 702-bis et seq of the Code of Civil Procedure) that can be selected by the claimant when the dispute falls under the jurisdiction of a single judge and not of a panel of judges (this covers a wide range of actions). The proceeding is identical to an ordinary one for the first stage - the filing of the writ of summons by the claimant and the first written response by the respondent - but it is much more concise during the stage of the taking of evidence. However, in the event the judge evaluates that the proceeding requires an ordinary taking of evidence and declares so by a non-appealable order, the proceeding continues in accordance with the ordinary rules.
Another type of summary proceeding is represented by the ‘injunction proceeding’ (article 633 et seq of the Code of Civil Procedure), which can be selected by creditors of a cash amount of money or of a determined quantity of fungible goods, who have written evidence of it. If proper evidence is provided, the judge issues ex parte an order of injunction to the debtor to pay or deliver the relevant goods within a certain deadline (usually 40 days). Within the same deadline, the debtor is entitled to challenge the injunction, in which case the proceeding will continue in a fully adversarial way in accordance with the ordinary rules. In the absence of that, and in case of non-compliance with the injunction, the procedure for its enforcement can start (see question 19).
Finally, it should be noted that where a defendant fails to respond to a writ of summons by the deadline provided for by the law, a ‘default of appearance’ is declared by the competent court. This does not mean an automatic adjudication of the case to the claimant, but simply that the decision of the court will only be based on the evidence provided for by the claimant (with no objections from the defendant).
Post-judgment reliefWhat post-judgment relief is available to successful claimants?
Conservative seizure can also be granted during the trial stage and after a judgment on the merits, on condition that the related requirements are fulfilled. At that stage, therefore, the conservative seizure represents the most significant relief during the time when proceeding with the enforcement of court judgments, in accordance with the procedure explained in question 19.
EnforcementWhat methods of enforcement are available?
As stated in question 12, the civil procedure for ensuring the enforcement of court orders is provided for by Book Three of the Code of Civil Procedure (articles 474 to 632). In essence, the procedure provides that the successful claimant, after obtaining an enforceable decision, must provide it with the execution formula and serve it to the defendant giving him or her a deadline to comply with it. In the event of non-compliance, the complex procedure for forced enforcement can start, under the supervision and with the relevant intervention of the judge of execution (article 479 et seq).
The ordinary way to start forced enforcement is garnishment (article 491 et seq). The defendant is entitled to request the judge of execution for the substitution of garnishment with an equivalent amount of money. A specific section of the Code of Civil Procedure regulates the interplay among the various creditors of the defendant (with the possibility of them obtaining a forced sale of the defendant’s assets, and the subsequent sharing of money resulting from the sale).
Garnishment can be ordered both on movables at the respondent’s premises (article 513 et seq) or at third parties’ premises, on real estate (article 555 et seq), undivided assets (article 599 et seq), assets of a third party subject to pledge or mortgage for another person’s debt, or on assets whose transfer by the defendant was revoked for fraud (articles 602 to 604).
The defendant always has the right to raise a formal objection against the injunction (article 615 et seq), so starting a dispute before the judge of execution.
Funding and costsWhat funding arrangements are available to parties contemplating or involved in litigation and do the courts have any powers to manage the overall cost of that litigation?
Until 2006, agreements between counsel and clients aimed at determining the counsel’s fees depending on the outcome of the proceedings (conditional fee agreements) were prohibited by the law. In particular, the prohibition covered the determination of fees both as a percentage or quota directly affecting the goods disputed and as a percentage of the value of the goods disputed, or the value of the entire litigation (article 2233(3) of the Civil Code and article 45 of the Lawyers’ Ethical Code): such agreements were considered null and void, and they produced an ethical responsibility for the counsel.
In that scenario, however, the law allowed that an additional and extraordinary compensation could be granted to counsel owing to the positive outcome of a proceeding, on condition that this compensation is indeed additional to normal compensation, and is reasonable and justified by the outcome achieved.
As of 2006, the law has recognised, to a limited extent, and subject to a written agreement, the lawfulness of conditional fee agreements (first by Law No. 248/2006 and currently by Law No. 247 of 31 December 2012). In particular, according to article 13(4) of Law No. 247/2012, ‘agreements by which counsel obtains as fee totally or partially a quota of the good subject to the performance or to the disputed claim are prohibited’. However, according to article 13(3) of Law No. 247/2012, ‘the determination of the fees is free: it is allowed the determination based on timing, on a forfait method [. . .] on a percentage of the value of the case or of what it is predicted could be advantageous, not only in pure patrimonial terms, to the beneficiary of the services’.
In essence, therefore, the current regime allows for the determination of fees depending on the outcome of a proceeding as a percentage of the value of the goods disputed or the value of the entire litigation, though prohibiting the determination of fees as a percentage or quota directly affecting the goods disputed.
As far as damages-based agreements are concerned, they should be considered allowed on the basis of the principles and legislation mentioned above.
After-the-event insurance is prohibited by law, as it always requires as a precondition that the actionable event did not occur or in any case was not known by the insured party.
With respect to the courts’ powers in managing the overall cost of a litigation, losing parties in civil litigation ordinarily have to pay their own legal costs, as well as the winning party’s legal costs, in the amount determined by the courts (on the basis of a note of legal costs filed with the court by the relevant parties; articles 91 and 92 of the Code of Civil Procedure). In that scenario, the amount of legal costs ordinarily decided by the courts is significantly lower than the fees that could be legally agreed upon by counsel and clients, according to the principles explained above. As a consequence, it will be up to the client to pay the difference between the legal costs adjudicated by the court (and refunded by the losing party) and the higher fees agreed upon with the counsel, always within the limits of the principles explained above.
