In Anglo-Saxon legal systems (and particularly in the U.S.) the institution of punitive damages (in Italian “danni punitivi”) is admitted.
Punitive damages are awarded to the injured party in addition to the amount awarded to compensate the damage suffered.
Therefore, punitive damages have a sanctioning and deterrent role, being aimed at punishing in a much more resolute manner the conduct of a person causing damage to avoid its repetition in the future.
Our case law has over the years taken a different approach to punitive damages, holding that they are in conflict with Italian law. The traditional approach followed by the Italian Supreme Court has indeed been to prevent the enforcement in Italy of foreign judgments (with a focus on U.S. decisions) involving pecuniary compensation to the injured party in the form of punitive damages.
Such approach seems to have changed now. A recent ruling of the Joint Divisions of the Italian Supreme Court has indeed established that the concept of punitive damages is not in itself incompatible with the Italian legal system.
Without going into the merits of the Court’s legal reasoning, we would like to focus our attention, as usual, on the concrete impact that all this may have, particularly in terms of civil liability insurance (since the new approach of the Supreme Court actually allows the introduction into our legal system of a damage category that has not been contemplated so far).
According to the Supreme Court, civil liability has not only a function of “restoring the patrimonial sphere” of the injured part, but a “multi-functional” nature.
The civil-liability regime is indeed considered as having a number of functions and, primarily, a compensatory and restoring one. According to the Supreme Court, in the Italian legal system, award of damages could indeed also have a preventive function or a sanctioning and punishing function.
The recognition of punitive damages in our legal system is, however, subject to certain obstacles in principle. Indeed, a foreign decision awarding punitive damages shall not be in conflict with Article 23 of the Italian Constitution, which provides that “no services of a personal or a patrimonial nature shall be imposed except on the basis of law”.
Therefore, “in foreign legal systems … award of punitive damages must be based on a statutory provision”.
To conclude, the ruling of the Joint Divisions of the Supreme Court is certainly innovative, but its scope should not be over-emphasised when taking into account the strict limits imposed on the recognition of foreign judgments awarding punitive damages.
In a nutshell, we cannot say that – at least for now – punitive damages will be introduced in our legal system without restriction, but it is more appropriate to say that they have been acknowledged as not being in conflict with our legal system.
From an insurance perspective, we cannot exclude that, as a result of the judgement at issue, civil liability insurance premiums for activities performed especially in the United States will increase.
In addition, for those who carry out their business activities in countries where punitive damages are admitted (primarily, the U.S.A.), our suggestion is in any event to verify that punitive damages are not excluded in civil liability insurance policies.