The Recognition of Punitive Damages in Italy: A commentary on Cass Sez Un 5 July 2017, 16601, AXO Sport, SpA v NOSA Inc

Abstract

AbstractFollowing the decision of the First Division of the Court of Cassation issued on May 16, 2016, the United Section of the Italian Court of Cassation delivered a very important ruling on 5 July 2017 deciding – for the very first time – in favour of the enforceability of US punitive damages in Italy.The decision of the Joint Divisions of the Court of Cassation was based on the following arguments: a) more than one provision of the Italian legislative framework already attributes to damage compensation a scope that goes far beyond the mere restoration of the prejudice suffered by the victim; b) recent case law on the matter excludes the incompatibility of the punitive scope of civil liability with the Italian legal system; and c) several doctrinal contributions have promoted the possibility of granting the injured party the right to obtain compensation, beyond the patrimonial loss suffered, assuming that civil liability may also have a deterrent effect.On these premises, the Plenary Session of the Italian Court of Cassation recognised that civil liability may serve different functions: it primarily grants compensation to the injured party, in line with the previous connotation of civil liability as restoration of patrimonial loss, but it may also ensure deterrence and sanction the wrongdoing of the tortfeasor.Given this comprehensive nature of civil liability, the decision stated that foreign decisions granting punitive damages are not against public policy in principle and, thus, can be enforced in Italy, but only under certain preconditions.A foreign ruling providing the payment of punitive damages may be executed in Italy only in the case where foreign legislative provisions, or equivalent sources, grant the competent judge the power to award punitive damages based on typical and predictable circumstances. Moreover, the amount of punitive damages due shall be limited.A decision of the Joint Divisions of the Italian Court of Cassation—which is entitled to provide an uniform interpretation of the law— represents a significant precedent, which lower courts and subsequent judgments are likely to follow, in terms of which courts will be required to recognise and enforce foreign decisions implying a compensation of punitive damages.