INSURALEX

2014 Seminar

Class Actions in Italy

Paris, 03 July 2014

Alessandro P. Giorgetti Studio Legale Giorgetti

Milan, Italy

Historical Background

Italian Legal Framework

The Procedure

Some cases of Class Action

Implications for the Insurance Industry

Agenda

Historical Background

The "actiones privatae" opposed to the "actiones populares"

In the original “actiones populares” the compensation was determined based on the mechanism of the “aestimatio” and the income was for the State

In some cases for the plaintiff there was a “praemium", i.e. the same citizen launching the proceeding was sharing with the State the award and at later stage the plaintiff was entitled to retain the entire compensation

Italian Legal Framework

• The inhibitory preventive and repressive collective actions have been introduced in 2005 by articles 37 and 139-140 of the Consumer Code

• Right of action rest with consumer

associations meeting the standards of the Consumer Code article 137

• Against unlawful, anti-competitive behavior/s and/or conduct detrimental to the fundamental rights of the consumer

• Economical sanctions cashed by the State for late or uncompleted respect of the Tribunals' orders, but no damages awarded

Italian Legal Framework

The Class Action has been introduced in 2008 by articles 2, codicils from 445 thru 449 of the Law No. 244/2007

•Italian court must have jurisdiction upon one or more of the proceedings •a group of plaintiff must be identified by way of common issues of fact or law •decision binds everyone who has opted-in•representant of the Group can be only:

(i) private associations; trade unions or foundations(ii) a public authority or body whose identification was

left to vague legal requirements•common issues are heard in one sample proceeding which is binding on the merit of the case, the Quantum debeatur shall be determined by way of a mediation and if this fails by a further proceeding in Court;•costs follow the events and claimants have no facilitations

Italian Legal Framework

The actual Class Action - whose renewed discipline can be found in art. 140-bis of the Consumer Code in accordance to article 49 of Law No. 99/2009 provision - came into effect on January the 1st 2010.

The action is available in relation to loss events that occurred on, or after, August 15, 2009 (date in which Law No 99/2009 became effective).

In January 2012, the discipline of the class action was further amended by the so-called deregulation Decree (D.L. 1/2012, converted with amendments into law No 27/2012).

Italian Legal Framework

The Legislative Decree November 20, 2009 No. 198 introduced into the Italian legal system also a collective action for the enhancement of the efficiency of public administrations and concessionaires of public services

This class action can be exercised against a public administration or a public service concessionaire for the consumer/users’ prejudice consequent to:

i. breach of terms or non-adoption of administrative acts which were to be adopted or issued within a period laid down by a law or regulation,

ii. breach of the obligations contained in the user statutes or service standards violation

The Procedure The right of action

The class action can be brought by:

i. individual consumers personallyii. associations or committees to

which the former gave the mandate of representation.

The associations to be entitled to bring a Class Action must be representative at national level so that they are included in the national list at the Ministry of Economic Development (art. 139 of the Consumer Code), or being associations and committees specifically and adequately representing the collective interests considered in the specific litigation.

The Procedure: The Class Action scope (1)

The Class Action scope is:

i.the assessment of a liability or the determination of a breach of contract or statutory duty imposed in the consumers interest;

ii.the award of damages and the condemn to refund undue prices and/or costs to individual consumers or users; and

iii.compelling the Public Administration to do or to eliminate, within a given timeframe, something that they were obliged to do or obliged to prevent and they did not.

The Procedure: The Class Action scope (2)

Legal situations grounding such actions can be divided into three categories:

i.breaches of contract by a company which gives rise to consumers and/or users homogenous rights to indemnification and/or restitutions, including rights pertaining to uniform or standard contracts according to articles 1341 and 1342 c.c.;

ii.homogenous rights accruing to final consumers of a particular product or service (the latter only as of 2012) against its manufacturer/provider, even in cases where no direct contractual relationship exists;

iii.consumers and/or users homogenous rights arising from unfair trading practices, or anti-competitive behaviors.

The Procedure: The introduction of the action

The class action is proposed by way of a writ of summons, to be served also at the competent court Public Prosecutor Office.

The action must be presented at the ordinary Tribunal competent for the capital city of the region where the company has its registered office; the Tribunal shall run the case collegially.

By way of derogation from this general policy, art. 140-bis Consumers Code expressly indicates, for some Italian regions, the competent court (i.e.: for the Basilicata and Calabria the Naples Tribunal shall have territorial jurisdiction or for the Abruzzo, Lazio, Marche, Molise regions competent will be the Rome Tribunal).

The Procedure: Opt-in: the adhesion mechanism

The Writ of joining the class action must contain:

i.the election of domicile; ii.the description of the constituent element/s of the right relied upon; iii.the personal documentary evidence of the joining party.

The writ can be personally filed with the competent Court Clerk office - without the need of the assistance/appointment of a lawyer - and (from 2012) also by way of a certified e-mail or fax.

The adhesion entails the adherent’s waiver of any individual action or right to damages founded on the same title upon which the class action is grounded.

The Procedure: The first hearing: “the filter"

At the end of the first hearing, the Court decide, by order, upon the admissibility of the class action application, declaring it inadmissible when:

i.is manifestly groundless; ii.there is a conflict of interest; iii.the judge sees no homogeneity amongst the individual rights actioned; iv.the proposer doesn't seem able to treat adequately the class interest.

The order is appealable at the competent Court of Appeal, within 30 days from its communication or notification, whichever occurred first. The appeal does not suspend the ongoing procedure.

The Procedure: The Court Order of Admissibility

With the order that declares the application admissible the Tribunal shall:

i.establishes the terms and conditions of the advertising to be made for the purposes of informing membership of the class;

ii.defines the characters of individual rights interested in the claim, specifying the criteria according to which those who want to join are included in the class or must be excluded from the action;

iii.establishes a peremptory term, not exceeding 120 days from the expiry of the deadline for the execution of the advertising, in which the writ of joining must be received by the Court Clerk (after such deadline no further class actions can be presented for the same titles/acts and in respect of the same enterprise);

iv.determines the procedure timeframe ensuring respect of due process and of equitable, efficient and prompt handling of the proceeding.

The Procedure: The Court Ruling

The judgment, upholding the class action application, shall provide:

i.the final amounts due to each who have joined the action, or ii.the homogeneous computing policy to determine the indemnity due to each member of the class.

In this latter case a homogeneous computing policy, the Tribunals gives to the parties a period not exceeding 90 days, to reach an agreement upon the damage liquidation. Should the granted term expire without the agreement has been reached, the Tribunal, at the request of at least one of the parties assess the sum due to each individual members.

The judgment became enforceable after 180 days from its publication.

The Procedure: The Appeal

Against the judgment, upholding the class action application, the losing party has full right of appeal.

On the interested party request, the Court of Appeal can:

i.suspend the enforceability of the decision of the Court, considering the overall entity the amount liquidated in judgment, the number of creditors and the possible difficulty of recovery of the sum paid in case of the appeal upholding;

ii.provide that, until the judgment should not become definitive, the total sum due from the debtor is frozen and remains blocked in the manner deemed most appropriate.

Some Cases of Class ActionsStatistics

Since January the 1st, 2010:

i.34 class actions, pursuant to art. 140-bis of the Consumers Code, have been launched

ii.07 have been declared admissible

iii.04 has been successful (?)

iv.21 announced new class actions

Some Cases of Class ActionsAdmissible

Class actions, pursuant to art. 140-bis of the Consumers Code, declared admissible are : 1.Voden Medical Instruments Spa (Tribunal of Milan –2010)

2.Banca Campania (Tribunal of Naples - 16.11.2011)

3.Polyclinic "Agostino Gemelli" (Tribunal of Rome - 20.04.2012)

4.Istituto Bancario Intesa SanPaolo (Tribunal of Turin - 15.06.2012)

5.Wecantour tour operator (Tribunal of Naples – 28.02.2013)

6.Comune di Petacciato and Comune di Montenero di Bisaccia (Tribunal of Rome - 02.05.2013)

7.Trenord Srl (Tribunal of Milan – 05.03.2014)

Some Cases of Class ActionsSuccerful (?)

The sole class actions, to date, where the Court sustained the claim : 1.Wecantour tour operator (Tribunal of Naples – 28.02.2013)

2.Voden Medical Instruments Spa (Court of Appeal of Milan – 27.08.2013)

3.Trenord Srl (Tribunal of Milan – 05.03.2014)

4.Istituto Bancario Intesa SanPaolo (Tribunal of Turin – 11.04.2014)

Implications for the Insurance Industry :

The Insureds‘ View

Higher limits needed

Defense costs inside or outside limits

Increased premium

Need for better risk management & corporate governance

Need of better information governance

Implications for the Insurance Industry :

The Insurers‘ View

New kind of claims previously not

seen in court

Potentially larger claims

Higher defense costs (€40/50,000 admission

phase and €100/150,000 merit and decision phase)

New types of clients affected

New opportunities of business

Need for new specialized legal consultants

QUESTIONS?

Thank you for your attention

Alessandro P. GiorgettiStudio Legale Giorgetti

Milan, Italy

INSURALEX VZW

Web-site: http://www.insuralex.com