The issue addressed in this article is of particular interest to all companies operating, even if without being established, in Italy. Suffice it to think of the numerous holding companies established in other States of the European Union or abroad whose personnel do business in Italy. By a judgment of 31 January 2017, the Criminal Court of Lucca established the applicability of the provisions of Legislative Decree No. 231/20011 to non-Italian entities, wondering in particular whether non-Italian companies having no head office or branch in Italy can be subjected to Italian jurisdiction.
On 29 June 2009, a freight train composed of 14 tank cars carrying Liquefied Petroleum Gas (LPG) derailed and five tank cars overturned, with LPG being released.
A fire was then set, as a result of which 32 people died and many people were severely injured and the railway infrastructure, vehicles and houses adjoining the station were seriously damaged.
The cause of the accident was identified to be the breaking of a component of the train (first rail tank car).
Since the reconstruction of the facts of the case is particularly complex, as far as it is relevant here, it should be noted as follows:
- the freight train was owned by an Austrian company and made available to an Italian rail operator under a lease;
- the rail operator sent the freight train out for repair to an Italian company;
- a German company belonging to the same group as the Austrian owner provided spare part repair services to the Italian company;
- during inspection, the Italian company installed the defective components provided by the German company;
- the first tank car broke down due to such defective components.
The charges and the decision of the Court of Lucca
A criminal action was then brought in relation to the above, inter alia, against certain directors and managers of all the companies involved, for the offences under Articles 589 and 590 of the Italian Criminal Code 2.
The said companies were also charged with an administrative offence of infringement of occupational health and safety law under Article 25-septies of Legislative Decree 231/2001 3.
More specifically, as concerns the said administrative liability of legal entities, the occupational health and safety provisions – which the Court considered to be infringed and triggering the negligent conduct under Articles 589 and 590 of the Italian Criminal Code – were deemed to fall within the following categories:
- a) provision and maintenance of the tank cars and the components thereof under the lease contract;
- b) assessment of the risk inherent in rail transport of dangerous goods.
In its decision, the Court of Lucca therefore established that the alleged offences under Articles 589 and 590 of the Italian Criminal Code were aggravated by the infringement of applicable occupational health and safety provisions. Such conclusion was reached having regard to the circumstance that the repairing company was provided with defective mechanical components by the foreign companies which, therefore, were in default of their obligations under a) and b).
Consequently, the Court found that the preconditions for applying the provisions of Legislative Decree 231/2001 were met, finding against all the foreign companies while acquitting two of the Italian companies from the charge under Article 25-septies of Legislative Decree 231/2001, for having adopted an appropriate organisation and management model 4.
The position of foreign entities
As recalled by the Court in the above judgment, two different views have developed on the applicability of Legislative Decree 231/2001 to foreign entities.
According to the first view, Legislative Decree 231/2001 should not apply to foreign entities having no permanent establishment in Italy since, unless otherwise expressly provided, legal entities governed by foreign law cannot be subjected to Italian law. Following such view, therefore, no liability could be alleged in the case at issue on the part of the Austrian company and the German company, because their negligent conduct in breach of their management and organisational duties occurred outside Italy.
The second view is based on certain judgments 5 stating that Legislative Decree 231/2001 applies also to non-Italian entities, irrespective of their having or not a branch or a permanent establishment in Italy. Such view is endorsed in light of the principle that stipulates the mandatory nature of criminal rules (Article 3 of the Italian Criminal Code) and having regard to Legislative Decree 231/2001: if the relevant provisions expressly apply to entities having their head office in Italy even if an offence is committed abroad, all the more so an entity who commits offence in Italy should be punished, irrespective of its nationality.
The Court, endorsing the latter view, stipulated some significant principles, stating, inter alia, as follows: (i) foreign undertakings are subject to Italian law merely for operating in Italy; (ii) in order for a foreign entity to be liable under Legislative Decree 231/2001, it is sufficient that even only part of the infringing conduct occurs in Italy or that the harmful event caused by act or omission occurs in Italy.
Finally, as noted above, the Court stated that the alleged offences were aggravated by infringement of occupational health and safety management legislation, acknowledging, on the one hand, the applicability of Legislative Decree 81/2008 also to the railway transport sector and, on the other, the applicability of occupational health and safety management requirements, with a view to protecting not only workers but also people unrelated to business context, provided that there is a causal link between any accident and infringement of applicable safety management provisions.
The judgment under examination seems of particular relevance in confirming that administrative liability arising from the offences under Legislative Decree 231/2001 can also be found on the part of foreign companies with no establishment in the form of either a head office or a branch in Italy.
Such conclusion was reached in light of the principle that stipulates the mandatory nature of criminal rules, according to which a company, even if foreign, must comply with Italian law for the mere fact of operating in Italy.
Therefore, all entities operating through their personnel in Italy should consider whether to adopt organisational models in accordance with Legislative Decree 231/2001 to avoid incurring the relevant liability and the ensuing penalties.
1 Legislative Decree No. 231 of 8 June 2001 ("Legislative Decree 231/2001") introduced a peculiar form of administrative liability applying to legal entities, including corporations, which has often been dealt with in this Newsletter. Suffice it therefore to briefly recall here that Legislative Decree No. 231/2001 provides for both financial penalties (up to approx. 1,500,000 Euros) and interdictory penalties (e.g. revocation of authorisation, ban on advertising, etc.) against the entities in whose interest or to whose benefit certain offences are committed (e.g. corruption offences; corporate offences; HSE-related offences.). The basis for such liability is founded in so-called "organisational guilt", to be understood as the failure by an entity to adopt an organisational structure that is suitable for preventing offences from being committed. This allows one to understand the reason why no punishment is envisaged when an entity has, inter alia, adopted an organisational model suitable for preventing offences like the one described and has appointed a supervisory body precisely with the task of supervising the operation and update of models.
2 i.e. respectively, manslaughter and unintentional injuries.
3 Article 25-septies of Legislative Decree 231/2001 (entitled "Serious or very serious personal injury through negligence committed in breach of the regulation on health and safety in the workplace") provides as follows: "In relation to the offence referred to in Article 589 of the Criminal Code [...], a financial penalty of 1,000 units shall apply. In case of conviction for the offence referred to in the preceding clause, interdictory penalties [...] shall apply, for a period of no less than three months and no more than one year [...] In relation to the offence referred to in Article 590, third paragraph, of the Criminal Code, committed in breach of occupational health and safety law, a financial penalty of no more than 250 units shall apply [...]".
4 As mentioned in note 1, in order not to incur in liability under Legislative Decree 231/2001, a legal entity should endow itself with an internal organisational model suitable for preventing offences like the one described.
5 See in this regard, Criminal Supreme Court, Sixth Division, No. 37895/2004, "Siemens case", and the judgment of the Criminal Court of Milan dated 28/10/2004.
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.