The saga of corporate trials in Italy has been full of suspense. The most recent episode was the Mastella Bill, a draft law issued by the Council of Ministers in March 2007 and now submitted to Parliament. The bill was intended to introduce wide-ranging reforms to the Code of Civil Procedure. Under its terms, the corporate trial - a compulsory form of proceedings designed to expedite corporate litigation - would have become an option to be applied only subject to the approval of all parties. If approved, this would have meant a premature end to the corporate trial. However, the bill was dropped following the end of the Prodi administration in early 2008.
Thus, the corporate trial format remains compulsory for the litigation of certain matters specified by law. Nevertheless, defects in the procedure remain and amendments are still needed. While lawyers await Parliament's next intervention, we review the corporate trial procedure and its story so far.
Introduction Of The Corporate Trial
In 2003 Italy's corporate law regime underwent far-reaching reforms intended to adapt existing regulations to the new needs of companies and other economic operators. With the same aim in mind, the legislature introduced a new type of trial for corporate litigation (ie, the litigation of disputes between corporations or concerning corporate relationships and shareholders' agreements). The new form of proceedings, regulated by Decree 5/2003, entirely replaced ordinary proceedings for the resolution of such matters.
Corporate trials of this sort differ from ordinary proceedings in that the first phase does not involve hearings or the judge. Rather, the parties begin proceedings by exchanging pleadings containing their respective claims and arguments. This exchange of pleadings continues until one of the parties asks the competent court to schedule a hearing for the discussion of the case and the taking of evidence.
The legislature's intention was to shorten trials and ensure that corporate disputes were resolved quicker than other cases.
After almost four years of Decree 5/2003 being in force, the corporate trial has reduced the average duration of a case.
The exchange of pleadings between the parties has proved an effective mechanism, resolving disputes much more quickly and effectively than the ordinary procedure did. Without hearings, the parties set each other deadlines for pleadings and responses and do not add to the workload of the court system.
The procedural rules for ordinary trials allow parties to file pleadings only after at least one hearing has taken place. In addition, since the Italian courts are overburdened with cases, parties must wait at least 90 days for a first hearing and a further three to six months for a subsequent hearing - an undesirably long period.
In light of this, the legislature decided to extend the applicability of the corporate trial to other matters. In 2005 the law was changed to allow parties to agree unanimously to the use of the corporate trial for all litigation.
For all the benefits arising from the use of the new procedure, the rules of the implementing decree are unclear on certain important issues. In particular, experience has shown that:
- there is a complete lack of regulation on the grounds on
which a writ of summons may be declared null and void;
- it is unclear how the procedural connection between
corporate cases and labour cases works;
- it is unclear whether a lawyer can serve pleadings on the
opposing party's lawyer directly or whether this must
be done by a bailiff;
- the exchange of pleadings works much less effectively in
cases involving more than one defendant; and
- the rules concerning the periods and deadlines for trial
are too restrictive for both the parties.
Given the significant defects of the corporate trial, we believe that the new Parliament will have to approve appropriate amendments. However, in view of the corporate trial's benefits, it is to be hoped that the procedure will continue to be compulsory for the litigation of corporate disputes.
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.