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Civil asset recovery

Parallel proceedings

Is 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).

Forum

In 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).

Limitation

What 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.

Jurisdiction

In 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 frame

What 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 evidence

What 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).

Witnesses

What 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 information

What 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 agencies

Can 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 disclosure

How 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 relief

What 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 orders

How 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 jurisdictions

How 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 EC Regulation 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 for 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 jurisdictions

What 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 Italy

The most relevant domestic provision in this respect is article 69 of the Law on Private International Law which states the following:

(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.

Enforcement of foreign judgments

With respect to EU countries (except Denmark), the enforcement of foreign judgments is governed by EC Regulation 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, EC Regulation 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 EC Regulation 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.

Causes of action

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.

Remedies

What 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 trial

Can 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 relief

What 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.

Enforcement

What 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 costs

What 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.

Criminal asset recovery

Interim measures

Describe the legal framework in relation to interim measures in your jurisdiction.

The interim measures provided for by the criminal system are the following:

  • ‘preventive seizure’ (article 321 et seq of the Code of Criminal Procedure), which is aimed at freezing the proceeds of crime (and the instrumentalities of crime) in view of a future confiscation (when the final conviction sentence will be issued);
  • ‘evidentiary seizure’ (article 253 et seq of the Code of Criminal Procedure), which is aimed at collecting the evidence necessary to prove the commission of a certain crime; and
  • ‘conservative seizure’ (article 316 et seq of the Code of Criminal Procedure), which is aimed at protecting and satisfying the credits of the state or of the victim of the crime, or both, by freezing the assets of the defendant in order to prevent their dissipation (in substantial analogy with the ‘conservative seizure’ provided for civil purposes).

Preventive or conservative seizure can only be ordered by a judge or court on application of the public prosecutor (and, with respect to the conservative seizure, also of the victim or civil party, in accordance with the procedure indicated in question 1). An evidentiary seizure, on the contrary, is a measure that can be adopted by the public prosecutor itself by issuing a grounded decree, without need for a court order.

Furthermore, although in theory the differences between the nature and aims of the mentioned forms of seizure are extremely clear, in practice, certain overlapping (and even abuse) can take place, especially between evidentiary seizure and preventive seizure, because the goods or assets that can be subject to such measures often coincide.

This is because, according to the law, the subjects of an evidentiary seizure are the ‘corpus of the crime’ and the ‘items related to the crime’, when they are necessary to prove the commission of the crime (article 253(1)), and because the corpus of the crime is defined by the law as ‘the things on which or through which the crime was committed, as well as the things which represent the product, profit or price of the crime’ (article 253(2)). For the same proceeds and instrumentalities of crime that can be subject to preventive seizure (for the purpose of confiscation), see question 23.

As far as the practical modality for the execution of preventive seizure is concerned, see question 24. With respect to the requirements and practical modalities for the execution of a conservative seizure, from the standpoint of a victim or civil party, see question 31.

Proceeds of serious crime

Is an investigation to identify, trace and freeze proceeds automatically initiated when certain serious crimes are detected? If not, what triggers an investigation?

Yes. When serious crimes are detected, a criminal investigation is automatically initiated, aimed at identifying and punishing the perpetrators of the crime, as well as identifying, tracing, freezing and later confiscating the proceeds of the same crime (in the framework of the same investigation and criminal proceeding).

Confiscation – legal framework

Describe the legal framework in relation to confiscation of the proceeds of crime, including how the benefit figure is calculated.

A confiscation procedure (in broad terms) often starts at the pretrial stage, by freezing the proceeds and instrumentalities of the crime through preventive seizure (article 321 et seq of the Code of Criminal Procedure), see question 21.

More specifically, the items that can be subject to confiscation, and the time and conditions that apply to confiscation, are generally provided for by article 240 of the Criminal Code, which states as follows:

In the event of conviction, the judge can order confiscation of the things that were used or destined to be used to commit the crime, and of the things that represent the product or profit of it.

Confiscation is always ordered:

(1) of the things that represent the proceeds of the crime [. . .].

In essence, therefore, and as a general rule, confiscation is ordered where a judgment of conviction is issued (through the same judgment), and is executed when such judgment becomes final. Furthermore, according to consolidated case law, the notion of ‘proceeds’ of crime includes ‘profit’, ‘product’ and ‘price’ of crime (Court of Cassation, Unified Sections, No. 26654 of 27 March 2008). The profit relates to the ‘economic advantage obtained in a direct and immediate way from the crime’; the product is the ‘empiric result of the crime, namely the things created, transformed, adulterated or acquired through the crime’; and the price is ‘compensation given or promised to a determined person, as consideration for the execution of the crime’.

According to the general rule above, in case of conviction confiscation is always compulsory (for the court) for the price of crime, although it is only discretional for the profit and product of crime. However, for the most serious crimes (corruption, money laundering, market manipulation, insider trading, etc) special provisions expressly provide for compulsory confiscation in relation to the profit of crime.

In addition, where confiscation of the direct profit or price of crime is not possible, the same special provisions provide for the confiscation ‘for equivalent’, namely, the confiscation of other money or goods for the same value (see article 322-ter of the Criminal Code for corruption, etc).

For the determination of the benefit figure (ie, the value of the benefit unlawfully obtained), see questions 29 and 32.

A special form of confiscation was introduced in relation to a compulsory list of crimes (such as Mafia association, extortion, usury, corruption and money laundering), according to which in the event of conviction for these crimes, confiscation is compulsory not only on the related identified proceeds of crime, but also on ‘money, goods and other things of value of which the individual convicted cannot justify the provenance’ and of which ‘he has the availability under any title in a value disproportionate to his income, declared for his income tax purposes, or his economic activity’ (article 12-sexies of Law Decree No. 306/1992). In essence, therefore, the provision has introduced a burden for the persons convicted for these crimes to justify the provenance of assets that appear to be disproportionate to their income or economic activity, otherwise they will be confiscated (see question 30).

Confiscation procedure

Describe how confiscation works in practice.

Confiscation is expropriation by the state of certain goods (mainly proceeds and instrumentalities of crime) relating to a determined crime. As explained in questions 22 and 23, confiscation is ordinarily ordered where a judgment of conviction is issued (through the same judgment), and is executed when such judgment has become res judicata (ie, is not appealable any more; ordinarily, judgment of first instance can be appealed before the Court of Appeal, and judgment of the Court of Appeal can be appealed before the Court of Cassation).

The court competent for the execution of confiscation is the court of execution, before which a concise adversarial proceeding can take place, on application of the public prosecutor, the defendant and the interested party, in the event of a dispute about the execution of confiscation (articles 676 and 665 of the Code of Criminal Procedure). If a dispute arises about the ownership of the confiscated assets (ie, even in the event a third party, who did not take part in the criminal proceeding, claims to be the owner of the relevant assets), the court of execution shall remit the case to the civil court of first instance, in order to determine legitimate ownership (see questions 27 and 31).

In the absence of disputes about the execution of confiscation, or when they are solved, the law provides that the clerk of the court of execution proceeds to the sale of the confiscated assets, unless special provisions provide for a particular destination of such assets, or unless the destruction of the assets has to be ordered, where sale is considered inconvenient (article 86 of the implementing legislation of the Code of Criminal Procedure). Money deriving from the sale is passed to the state. As for the particular destination of certain assets, special provisions (with regard to the Mafia, contraband, etc) provide that confiscated assets (either movable or real estate) can be acquired and maintained as the patrimony of the state (and of local municipalities), and destined to a particular use in the public interest.

As explained in question 21, the confiscation procedure (in broad terms) often starts at the pretrial stage, by freezing the proceeds and instrumentalities of crime through the preventive seizure (article 321 et seq Code of Criminal Procedure), in such a way that at the moment of the final judgment of confiscation the relevant assets are already under control of the state authorities. Specific provisions provide for the practical modalities of executing preventive seizure, in relation to the targeted assets. According to article 104 and 104-bis of the implementing legislation of the Code of Criminal Procedure, preventive seizure is executed as follows:

  • on movable goods and credits, according to the civil procedure for garnishment (see question 19);
  • on real estate and registered movable goods, through the entry of the seizure in the relevant registers (see question 9);
  • on the assets of a company or enterprise, through the entry of the seizure in the register of enterprises (see question 9) and, where necessary, through appointing a special receiver (see question 34); and
  • on shares and quotas of companies, through the entry of the seizure on the company’s books and in the register of enterprises.

Agencies

What agencies are responsible for tracing and confiscating the proceeds of crime in your jurisdiction?

Public prosecutors are responsible for the investigation and prosecution of all criminal offences, and in that framework they identify and trace the related proceeds of crime, and request their freezing and later confiscation to the competent judge or court.

Public prosecutors are not part of the government but are professional magistrates, and their duty to bring criminal prosecutions is compulsory and not discretionary (unless they assess that no crime was ever committed and then request a dismissal from a competent judge).

 

Secondary proceeds

Is confiscation of secondary proceeds possible?

Yes, case law is consolidated in the sense that confiscation applies not only to the proceeds directly and immediately derived from crime, but also to any other property acquired by the offender through the investment of such unlawful proceeds (Court of Cassation, Unified Section, No. 10,280 of 25 October 2007). However, the burden to strictly prove all the transfers and modifications deriving from the original proceeds of crime lies with the public prosecutor.

Third-party ownership

Is it possible to confiscate property acquired by a third party or close relatives?

The general principle (with a few exemptions, see question 33), is that confiscation does not take place when the ownership of the items subject to potential confiscation is of a ‘person extraneous to the crime’ (a third party in good faith): in this case, the items should be handed over to such third party. However, case law is consolidated in adopting a very strict notion of a ‘person extraneous to the crime’, according to which any subject who - although not being criminally liable - has, through his or her conduct, made the commission of the crime easier, cannot be considered extraneous to the crime, and therefore is not entitled to prevent confiscation and to obtain the restitution of the relevant items. In particular, according to case law, the only subject who can be considered extraneous to the crime is the subject who does not have any kind of negligent link - direct or indirect, owing to a lack of vigilance or other causes - with the commission of the crime (Court of Cassation, No. 16,405 of 21 April 2008).

In accordance with these principles, only in very limited situations has case law maintained that close relatives could be considered ‘persons extraneous to the crime’ and as such had title to prevent confiscation.

Expenses

Can the costs of tracing and confiscating assets be recovered by a relevant state agency?

Yes, all the costs of a criminal proceeding (with some exceptions) in case of conviction are attributed to and enforced against the defendant, including the costs relating to the tracing and confiscating of the assets (see Presidential Decree No. 115/2002). As explained in question 21, at a pretrial stage the credits of the state against the defendant (including all the costs of the criminal proceeding, the potential fines, etc) can be secured by the interim measure of the conservative seizure (article 316 et seq of the Code of Criminal Procedure), which is ordered by the competent court on application of the public prosecutor, in order to prevent the dissipation of the defendant’s assets. See question 31 with respect to the requirements and practical modalities for the execution of conservative seizure.

Value-based confiscation

Is value-based confiscation allowed? If yes, how is the value assessment made?

Yes, as explained in question 23, confiscation for equivalent is allowed by special provisions only in relation to a compulsory list of crimes (corruption, money laundering, tax fraud, market manipulation, insider trading, usury, etc), where recovery of the direct profit or price of crime is impossible. Confiscation for equivalent is also allowed on the company assets, under the same conditions, with respect to the particular responsibility of companies for certain crimes committed by their managers or employees in the interest or for the benefit of the company (article 19 of Legislative Decree No. 231/2001).

The value assessment of assets to be confiscated is first made by the public prosecutor (even at a pretrial stage, for the purposes of the interim measure of preventive seizure) by determining the quantum of the relevant proceeds of crime, where necessary by appointing an expert witness for the task. Such determination, however, must be confirmed (or amended) by the competent court, when granting the interim measure, and subsequently when ordering confiscation.

Burden of proof

On whom is the burden of proof in a procedure to confiscate the proceeds of crime? Can the burden be reversed?

As mentioned in questions 22 and 23, when serious crimes are detected, a criminal investigation is automatically initiated, aimed at identifying and punishing the perpetrators of the crime, as well as at identifying, tracing, freezing and later confiscating the proceeds of the crime (in the framework of the same investigation and criminal proceeding). Therefore, in accordance with the general principles (and in particular with article 27(2) of the Constitution, which provides that a defendant cannot be considered guilty until final conviction), the burden of proof lies with the public prosecutor, either in proving ‘beyond reasonable doubt’ the guilt of the defendant in relation to a certain crime, or in proving that specific assets or money are the proceeds of the mentioned crime and as such must be confiscated.

The burden is reversed, to a certain extent, in relation to the special form of confiscation provided for by article 12-sexies of Law Decree No. 306/1992. In that respect, as explained in question 23, the Law provides that in relation to a compulsory list of crimes, in the event of conviction, confiscation is compulsory not only on the related identified proceeds of crime, but also on ‘money, goods and other things of value of which the individual convicted cannot justify the provenance’ and of which ‘he has the availability under any title in a value disproportionate to his income, declared for his income tax purposes, or his economic activity’. Therefore, the burden of the public prosecutor is only to prove the existence of the mentioned disproportion (in addition to the commission of the relevant crimes); however, it lies with the defendant to prove that his or her assets were acquired in a legitimate way.

Using confiscated property to settle claims

May confiscated property be used in satisfaction of civil claims for damages or compensation from a claim arising from the conviction?

According to the law, as explained in question 1, in the event that a crime has caused damage, the ‘person injured by the crime’ is entitled to bring the civil action for the related restitution and damages not only before a civil court, but also in a criminal proceeding, by ‘standing as civil party’ in the latter. Where such standing as civil party takes place, the victim of the crime is entitled, as explained in question 21, to request and obtain from the competent court conservative seizure (article 316 et seq of the Code of Criminal Procedure).

In particular, the law provides that ‘where there is grounded reason to believe that the guarantees of the civil obligations deriving from crime will lack or will be dissipated, the civil party can request the conservative seizure of the defendant’s assets [. . .]’ (article 316(2)), as well as the following:

  • ‘conservative seizure ordered on request of the public prosecutor goes to the advantage also of the civil party’ (article 316(3));
  • by virtue of the seizure, the credits of the state and the civil party are considered ‘privileged’ (article 316(4)); and
  • criminal conservative seizure is executed in accordance with the civil procedure provided for its enforcement on movable goods and real estate (article 317; see question 19).

Furthermore, the law expressly provides that criminal conservative seizure is converted into garnishment when the judgment convicting the defendant to pay a fine becomes final, and to oblige the defendant to pay civil damages to the civil party (article 320(1)). In addition, the law provides as follows:

  • the forced enforcement on the assets seized takes place in accordance with the provisions of the Code of Civil Procedure; and
  • the money derived from the sale of the mentioned assets is first paid to the civil party under title of damages and of refund of its costs for the proceeding, and subsequently it is used for the fines, costs of the proceeding and any other amount to be paid by the defendant to the state (article 320(2)).

In the event that the victim of the crime does not request to stand as a civil party in the criminal proceeding, it can claim the ownership of the assets subject to confiscation by intervening before the court of execution of the confiscation (as a third party in good faith or person extraneous to the crime), in accordance with the procedure explained in question 24 and the conditions explained in question 27. If a dispute arises about the ownership of the assets to be confiscated, the court of execution shall remit the case to the civil court of first instance, in order to determine legitimate ownership.

Confiscation of profits

Is it possible to recover the financial advantage or profit obtained through the commission of criminal offences?

Originally, public prosecutors and courts had adopted a wide definition of ‘profits’ of crime, such as that where a company obtained a public procurement through the payment of a bribe, the entire value of that procurement could then be subject to preventive seizure or confiscation. In that scenario, costs incurred by the company in order to comply with its obligations in accordance with the procurement could not be deducted from the amount subject to seizure or confiscation. In recent years, however, the Court of Cassation has restricted such a wide notion of profits of crime, maintaining that the amount subject to seizure or confiscation should be determined by deducting from the entire value of the procurement the value of the services effectively carried out by the company in accordance with the procurement, and that resulted to the benefit of the relevant public authority (Court of Cassation, Unified Sections, No. 26,654 of 27 March 2008; Court of Cassation, No. 42,300 of 26 June 2008).

Non-conviction based forfeiture

Can the proceeds of crime be confiscated without a conviction? Describe how the system works and any legal challenges to in rem confiscation.

The most relevant cases of confiscation without conviction relate to such ‘things, the manufacturing, use, carry, detention or alienation of which represent a criminal offence’: in relation to such things, confiscation is always ordered, even if a conviction is not issued (article 240(2), No. 2 of the Criminal Code). The rationale is that such things (clothes with a counterfeited trademark, drugs, etc) are intrinsically criminal and dangerous for society, and as such must be confiscated, even if the defendant is acquitted from the related charges.

Another type of confiscation without conviction that can be assimilated to in rem confiscation is the confiscation as a ‘preventive measure’ (namely, measure ante delictum), which it is provided for socially dangerous people who are members of mafia organisations, in relation to the assets they possess, where the value of such assets is disproportionate to their income and their economic activity and they cannot justify their legitimate provenance (Law No. 575/1965 and subsequent amendments). In that scenario, such an exceptional form of confiscation without conviction can be justified by the need to ensure public security by preventing the commission of future offences by individuals who have already been shown to be socially dangerous. Out of these exceptional cases, the introduction in the legal system of additional cases of confiscation without conviction is unanimously considered a violation of the Constitution, and in particular of the principle laid down by article 27(2), according to which a defendant cannot be considered guilty until final conviction.

Management of assets

After the seizure of the assets, how are they managed, and by whom? How does the managing authority deal with the hidden cost of management of the assets? Can the assets be utilised by the managing authority or a government agency as their own?

As explained in question 24, the law provides that where the subject of preventive seizure is an enterprise or company as a whole, or relates to assets for which management is necessary, the competent court appoints a special receiver (article 104-bis of the implementing legislation of the Code of Criminal Procedure). The receiver performs its task in accordance with the instructions, and under the supervision, of the competent court (which can be addressed by the public prosecutor and the defendant for any matters related to the above).

The costs of management of the assets are ordinarily provided by the state, but in case of conviction they are then attributed to and enforced against the defendant, as are all other costs relating to the criminal proceeding, and to the tracing and confiscating of the assets (see question 28).

As a general principle, assets seized (such as cars, houses, etc) can be used by state authorities as their own only after the confiscation procedure has been completed and where the specific attribution to such authorities of the confiscated assets has taken place, in accordance with the special laws on the subject (see question 24). However, where the subject of preventive seizure is an enterprise or company as a whole, the assets of such enterprise or company can be used by the receiver, to the extent necessary to grant the continuation of the enterprise or company’s activity. The same principle applies to the seizure of other assets for which management is considered necessary.

Making requests for foreign legal assistance

Describe your jurisdiction’s legal framework and procedure to request international legal assistance concerning provisional measures in relation to the recovery of assets.

Requests for mutual legal assistance to foreign countries, including with respect to provisional measures relating to the recovery of assets, are governed by the international treaties signed and ratified by Italy. They include the following:

  • the European Convention on Mutual Legal Assistance in Criminal Matters (Strasbourg, 1959);
  • the Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime (Strasbourg, 1990); and
  • many bilateral treaties.

In the absence of a treaty, requests for mutual legal assistance are governed by specific provisions of the Code of Criminal Procedure (articles 727 to 729).

In particular, Italy has implemented the Strasbourg Convention of 1990 by introducing a provision according to which the seizure or confiscation of proceeds of crime localised abroad must be requested from the foreign state by the Italian Minister of Justice, who has the faculty (and not the duty) to do so, even where an Italian court has issued an order providing for the freezing or confiscation. See article 745(2-bis) of the Code, as introduced by Law No. 328/1993, as follows:

The minister additionally has the faculty, in the cases provided for by international treaties, to request the carrying out of investigations for the identification and the search of assets that are located abroad and that can become the subject of a request for the execution of confiscation, as well as the faculty to request their seizure.

Notwithstanding the clear wording of this law provision, which reserves the power to request the freezing or confiscation of proceeds of crime localised abroad to the Minister of Justice, this is often not complied with in the Italian requests to foreign states on the subject.

Complying with requests for foreign legal assistance

Describe your jurisdiction’s legal framework and procedure to meet foreign requests for legal assistance concerning provisional measures in relation to the recovery of assets.

As explained in question 35, the subject is governed by international treaties signed by Italy, and the Italian domestic provisions apply in the absence of an applicable treaty in order to supplement and regulate the aspects not regulated by the treaties.

In particular, domestic law provides (article 723 et seq of the Code of Criminal Procedure) that where a request for mutual legal assistance is made from a foreign authority, both the Minister of Justice and the court of appeal geographically competent (depending on the place of execution of the request) must approve it. If approved, the court of appeal delegates the Italian ‘judge for the preliminary investigations’ (not the public prosecutor) for the execution of the request.

In essence, the Minister of Justice can deny the request as follows:

(i) where the acts requested compromise the sovereignty, security or other essential interests of the state;

(ii) where the acts requested are expressly prohibited by Italian law or they conflict with the fundamental principles of the Italian juridical system;

(iii) where there are grounds to believe that considerations relating to race, religion, gender, nationality, language, political opinions or personal or social conditions can negatively affect the carrying out or the outcome of the trial in the requesting state; or

(iv) where the requesting state does not provide proper guarantees of reciprocity (article 723).

In addition, the court of appeal can subsequently deny the request where the conditions under (ii) and (iii) are met, or the dual criminality principle is not fulfilled (article 724).

The procedures above apply in general with respect to requests for mutual legal assistance from foreign states, and procedures substantially similar are provided for in relation to foreign requests aimed at identifying and freezing assets located in Italy (articles 737 to 737-bis).

The relevant international treaties can simplify the conditions for granting assistance.

Treaties

To which international conventions with provisions on asset recovery is your state a signatory?

The most relevant convention signed by Italy on the subject is the Strasbourg Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime of 1990; for references to it and to the Strasbourg European Convention on Mutual Legal Assistance in Criminal Matters of 1959, see question 35.

In any case, the additional international and EU instruments of which Italy is a signatory or addressee, which can have a certain relevance on asset recovery, are as follows.

European Union

  • The Convention on the Fight against Corruption Involving Officials of the European Communities or Officials of the Member States of the European Union, Brussels, 26 May 1997 (ratified by Law No. 300/2000, which entered into force on 26 October 2000);
  • the EU Framework Decision 2003/577/JHA on the execution in the European Union of orders freezing property or evidence of 22 July 2003 (not implemented yet); and
  • the EU Framework Decision 2006/783/JHA on the application of the principle of mutual recognition to confiscation orders of 6 October 2006 (not implemented yet).

Council of Europe

  • The Criminal Law Convention on Corruption, Strasbourg, 27 January 1999 (ratified by Law No. 110/2012, which entered into force on 27 July 2012); and
  • the Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime and on the Financing of Terrorism, Warsaw, 16 May 2005 (signed but not yet ratified by Italy).

International

  • The OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, Paris, 17 December 1997 (ratified by Law No. 300/2000, which entered into force on 26 October 2000);
  • the UN Convention against Transnational Organized Crime, New York, 15 November 2000 (ratified by Law No. 146/2006, which entered into force on 12 April 2006); and
  • the UN Convention against Corruption, New York, 31 October 2003 (ratified by Law No. 116/2009, which entered into force on 15 August 2009).

Private prosecutions

Can criminal asset recovery powers be used by private prosecutors?

Private individuals or organisations are not entitled to prosecute within the Italian legal system because the criminal action is always and only public, and criminal asset recovery powers must only be exercised by public prosecutors.

Update and trends

Update and trends

Are there any emerging trends or hot topics in civil and criminal asset recovery in your jurisdiction?

The most relevant trend is represented by the increasing role of confiscation ‘for equivalent’, which in recent years has been extended to a significant number of criminal offences and has been consequently widely used in the practice of public prosecutors and courts, in addition to the related difficulty of precisely determining the notion of ‘profits’ of crime, and the amount subject to seizure or confiscation, especially in relation to the profits deriving from public procurements obtained through corruption or fraud.

A relevant peculiarity of the legal system to be taken into account when selecting a civil or criminal route in relation to asset recovery is the possibility of a victim bringing the civil action for restitution and damages directly in a criminal proceeding by ‘standing as civil party’, with significant advantages resulting from it (including the possibility of obtaining criminal ‘conservative seizure’ at a pretrial stage, with related entitlement to be satisfied with precedence on the defendant’s assets in case of conviction).