Italy: Freezing Injunctions Under Italian Law

Last Updated: 17 February 2014
Article by Giuseppe Broccoli

What a seizure order is and how it works in Italy

WHAT IS A FREEZING INJUNCTION?

A freezing order (also known as seizure order) is a Court injunction that can be obtained to restrain a party from disposing of its assets in prejudice of the creditors' rights.

Article 671 of the Italian Civil procedural Code provides that:

"the judge, at the request of the creditor who has a valid fear of losing the security for his claim, can authorize a precautionary seizure of real or personal property of the debtor or of monies and things due to him, within the limits allowed by the law for attachments."

The interest of the claimant is therefore to obtain an order from the Judge pursuant to which the debtor will be forbidden to dispose of his/her assets which will remain a valid guarantee for the creditor. Two are the main features of the freezing order:

(i) The debtor cannot dispose of its assets;

(ii) The order of the Judge is directed to all the assets of a debtor and not to specifically identified assets.

WHEN WILL A FREEZING ORDER BE GRANTED BY THE COURT?

A freezing order can be granted if it fulfils two main requirements which can be summarized as follows:

(a) the Court must be persuaded that the claim is prima facie grounded on summary basis without carrying out any investigation and conducting any detailed analysis on the merits (on the basis of the documentary evidence submitted by the claimant); and

(b) the Court must be persuaded that, should the measure be denied, the time necessary to obtain a judgment on the merits may prejudice (in an imminent and irreparable way) the right of the claimant (again on the basis of the allegations from the claimant).

Recent case law have almost unanimously ruled that, as to the requisite under (a) above, the requested Court must be satisfied and persuaded (on the balance of probabilities) that the claim -upon which the urgent interim proceeding is requested- is likely to be confirmed or ascertained in any further legal proceeding on the merit; as to the requisite under (b) above, it must be proved that the risk of prejudice is imminent (ie either has already started to produce its effects or it is likely to produce its effects very soon) and irreparable (eg the prejudice is unlikely to be remedied and/or recovered by any possible damage awarded in a merit proceeding).

WHAT ASSETS CAN BE SUBJECT TO A FREEZING ORDER AND HOW?

A seizure order can be issued in respect of immovable (real property) and movable assets of the defendant. It can also be issued in respect of movable assets and/or receivables that the defendant has not yet collected from third parties.

The seizure order over immovable assets is executed through the registration of the seizure order on the real estate registry.

The seizure order over movable assets is executed:

(i) in respect of personal property which is in the availability of the debtor, the bailiff will actually attach the property)

(ii) in respect of property or receivables that the debtor has not yet collected from third parties, an order is given to the debtor and/or to the third party by way of which the property and/or the receivable is 'virtually' assigned to the creditor.

HOW DOES THE PROCEDURE WORK?

The procedure for interim measures provides that, after the submission of the application from the claimant, the Judge shall schedule the hearing for discussion of the interim measure application. At the hearing a discussion shall take place and after that the Judge shall deliver a judgment allowing or rejecting the application for the interim relief. No discussion on the merit of the case is allowed (or if started it should be rejected by the judge).

If even the time necessary to have an hearing fixed after the filing of the application might cause some prejudice to the claimant, the Judge may grant the urgent interim relief before the hearing on the basis of the sole application submitted by the claimant (the so called decision inaudita altera parte, ie without hearing the defendant). Also in such case the urgency and prejudice must be proved by the claimant. Upon issuing such order the Judge shall fix an hearing to be held within the following 15 days from the date of the decision. At such hearing the Judge will confirm, amend or revoke the decision taken before inaudita altera parte.

The decision taken by the Judge in respect of the interim measure application can be appealed before the upper Court to be submitted within 15 days from the decision (if taken at the hearing) or from the notification of the decision (if taken immediately after the hearing) of the judge on the measure request. The appeal decision shall be taken (normally) within 20 days from the submission of the appeal.

The appeal does not suspend the enforceability of the interim relief unless the appeal judge decides, due to reasons arisen after the granting of the interim relief, either (i) to suspend the enforceability or (ii) to order the granting of a security.

The appeal decision is not subject to further appeal.

COUNTER SECURITY FOR THE PROTECTION OF THE RESPONDENT

The Judge who has granted an interim relief may also impose to the claimant a counter-security in favor of the defendant. This is for the protection of the defendant (as addressee of the interim relief) and is aimed to protect the interest of the defendant in the case the freezing order will be revoked at a later stage or the merit of the case be decided in favor of the defendant itself.

WHAT TO DO ONCE THE FREEZING ORDER HAS BEEN ISSUED?

The freezing order must be executed within the 30 days from the granting. The claimant has therefore to notify and start the execution process whereby the assets subject to the order will be frozen until a decision on the merit is taken. If the execution process is not started within the time limit, the freezing order will cease to be effective.

In addition, the freezing order will cease to exist if the legal proceeding on the merit is not started within 60 days form the granting.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Giuseppe Broccoli
 
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