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

Following 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 on July 5, 2017 a very important ruling, deciding - for the very first time - in favor of the enforceability in Italy of US punitive damages. 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 exclude the incompatibility between the punitive scopes of civil liability with the Italian legal system; c) several doctrinal contributions have promoted the possibility to grant the injured party the right to obtain compensation, which goes 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 recognized 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, could be enforced in Italy, but only at 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 with 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 case they will be required to recognize and enforce foreign decision implying a compensation of punitive damages.