The impact of "Brexit" on the legal framework
As of 31 December 2020, the United Kingdom is no longer an EU Member State. This means that the United Kingdom is a third country for the purpose of the Brussels Recast Regulation 1215/2012 (Brussels Recast).
The EU-UK Trade and Cooperation Agreement establishing the terms of UK's 'so called Brexit deal' does not include any provisions at all on jurisdiction and enforcement of judgments in civil cases.
It had generally been anticipated that the Brexit deal might provide for the UK's accession to the Lugano Convention 2007 to be completed in time for the end of the Brexit transition period. The Lugano Convention 2007 is very similar to Brussels Recast but the latter has the advantage of dispensing with formalities that are necessary to make the foreign judgment enforceable. The UK applied to join the Lugano Convention 2007 on 8 April 2020, but so far, the EU (which has a veto over the UK's accession) has not approved the application.
It is uncertain whether the UK is still a party to the Brussels Convention 1968 on jurisdiction and the enforcement of judgments in civil and commercial matters, the 1971 Protocol to that Convention, and certain related Accession Conventions. On 29 January 2021, the British government informed the European Council of its view that the Convention has ceased to apply to the UK and Gibraltar with the expiry of the transition period on 1 January 2021. The communication merely reflects an opinion by the British government, which as such is of no legal consequence. The Vienna Convention on the Law of Treaties enumerates the cases in which an international convention is terminated. A unilateral denunciation is not among them. Absent an impossibility of performance, a fundamental change of circumstances or a breach by one party, an agreement by the parties is required to suspend the operation of a treaty. It appears that, as is the case with the Lugano convention, the EU is ultimately the arbiter of whether the Brussels Convention 1968 ceases to apply to the UK. This may actually not be a bad thing pending the accession by the UK to the Lugano Convention, accession that the EU can block indefinitely.
The reason why the Lugano Convention 2007 is considered by the UK as the "lesser evil" compared with the Brussels Convention 1968 is that the European Court of Justice has jurisdiction on interpretative matters relating to the latter but not the former.
The Hague Convention 2005 has continued to apply from 1 January 2021. The Hague Convention 2005 requires the courts of contracting states to uphold exclusive jurisdiction clauses, and to recognise and enforce judgments given by courts in other contracting states that are designated by such clauses.
The contracting states include the UK and the EU. Hence, the Hague Convention 2005 can be relied upon when seeking to enforce in Italy a judgment given by a British court with exclusive jurisdiction.
To complete the overview of EU law that provided for direct enforceability in Italy of a decision of UK court concerning the payment of money, one ought to mention the European Small Claims procedure (for cross-border claims of up to ? 5,000) of Regulation (EC) No. 861/2007, the European Order for Payment procedure (for undisputed commercial money claims) of Regulation (EC) 805/2004. Neither such Regulation applies any longer as far as the UK is concerned.
Recognition in Italy of foreign judgments from outside the EU
Law 218/1995 is the Italian statutory instrument that deals with the enforcement of foreign judgments. EU law's Brussels regime (of which Brussels Recast is the latest iteration) has been applying instead of Law 218/1995 as far as the enforcement of judgments from other EU Member States is concerned.
Law 218/1995 has continued to apply to foreign judgments originating from outside the EU and it is therefore the internal legal framework that applies to UK judgments after Brexit.
Article 64 of Law 218/1995 states as follows: "The foreign judgment is recognized in Italy without the need of any procedure where: a) the judge making the judgment could be invested of the lawsuit in accordance with the principles of jurisdiction of Italian law b) the claim form was brought to the attention of the defendant in accordance with the law of the place where the proceedings took place and the essential rights of the defence were not infringed; c) the parties made an entry of appearance in accordance with law of the place where the proceeding took place or the absentia has been declared in accordance with that law; d) the judgment has become final in accordance with the law of the place where it was given; c) the judgment is not contrary to another judgment handed down by an Italian court and which has become final; f) there are no pending legal proceedings before an Italian court in connection with the same subject matter and between the same parties (as that of the judgment), which began before the foreign proceedings; g) what the judgment provides for shall not have an effect that is contrary to public policy."
It is worth pointing out that "public policy" referred to by Art. 64 relates strictly to rules and principles of Italian civil procedure, not of Italian substantive law. By way of example, the Italian Supreme Court found a judgment formed in a jurisdiction that does not afford a system of appeal to be in breach of the public policy requirement.
There are limited circumstances in which the Italian judicial authority can be invested with the ascertainment of the compliance with the requirements set out in Article 64. Such circumstances are set out in Art. 67 of Law 218/1995 which states that in the event of non-compliance with or challenge to the recognition of the foreign judgment or other judicial decision, or when it is necessary to proceed with the enforcement of the judgment, anyone who has an interest may ask the Court of Appeal of the place where the judgment is to be complied with, to ascertain the fulfilment of said requirements. Art. 67 goes on to say that the foreign judgment or other judicial decision, together with the Court of Appeal's decision referred to above, shall combinedly constitute what is to be complied with or can be enforced in Italy.
Steps that are necessary to make a money judgment enforceable in Italy
The fact that a foreign judgment form outside the EU is automatically recognized in Italy (subject to challenge on the limited grounds set out above) does not mean that it can be enforced there in its original state.
Art. 474, the first paragraph of the Italian civil procedure code provides that the 'esecuzione forzata' (literally 'forced execution' which broadly corresponds to 'enforcement' in English) can only be pursued where there is a 'titolo esecutivo' (literally an 'executable title'), the subject matter of which is a legal right that is certain, liquidated (i.e. expressed as monetary amount) and due.
Titolo esecutivo is broadly divided into the following two categories: judicial decisions ordering the payment of money being one and private law instruments such as debentures.
In order to become enforceable, the titolo esecutivo must be served upon the judgment debtor in Italy alongside the 'atto di precetto', a formal warning that is prepared by the lawyers of the creditor who is seeking to enforce.
Italian law does not specify what a titolo esecutivo is by reference to a foreign judgment. However, according to Art. 31 of the Brussels Convention 1968 "a judgment given in a Contracting State and enforceable ('esecutiva' in the Italian text, TN) in that State shall be enforced in another Contracting State when, on the application of any interested party, the order for its enforcement has been issued there".
Hence, what needs to be served upon the judgment debtor in Italy alongside the atto di precetto is the English judgment together with declaration of enforceability of the English judgment. Such declaration is issued by the Court of Appeal that is territorially competent in Italy (there is a Court of Appeal in every Regional capital). The Court of Appeal that is territorially competent is that of where the judgment debtor is domiciled or, if the judgment debtor is domiciled outside of Italy, the Court of Appeal of where the enforcement is to take place (e.g. the location where the defendants Italian assets are located).
Art. 46 provides the party seeking recognition or applying for enforcement of a judgment shall produce a copy of the judgment which satisfies the conditions necessary to establish its authenticity and, in the case of a judgment given in default, the original or a certified true copy of the document which establishes that the party in default was served with the document instituting the proceedings.
Art. 47 provides that a party applying for enforcement shall also produce documents which establish that, according to the law of the State in which it has been given, the judgment is enforceable and has been served.
The judgment debtor can, within a month of service, file with the Court of Appeal an opposition to the decision on enforceability. The term to file the opposition is two months if the judgment debtor is domiciled outside of Italy.
In the case of English immediately enforceable judicial decisions granted ex parte, the actual enforceability in Italy is, pursuant to Art. 38, suspended for as long as the decision in question can be challenged or, if the decision has been challenged, until the challenge is ruled upon by the competent home court. Whilst the enforceability is suspended, protective measures can be taken against the property of the party against whom enforcement is sought.
The Lugano Convention 2007 has similar provisions. It does not particularly matter whether the United Kingdom remains a party to the Brussels Convention 1968 or accedes to the Lugano Convention 2007. The important thing is that it is party to either of them. Unfortunately, at the moment, it is not clear if that is the case at that may create problems when it comes to enforcing a UK money judgment in Italy.
To summarise, when we are providing assistance in connection with the enforcement of a UK money judgment in Italy we:
- prepare a certified true copy (in accordance with Italian law requirements) of the English judgment;
- have an Italian translation of the English judgment prepared by a sworn translator;
- if the judgment was given in default, prepare a certified true copy of the certificate of the proof of service of the document instituting the proceedings;
- apply to the territorially competent Court of Appeal for a declaration of enforceability.
- prepare the atto di precetto;
- if no opposition to the declaration of enforceability is filed by the judgment debtor, serve upon the judgment debtor the atto di precetto and the English judgment, its Italian translation together with the declaration of enforceability issued by the Court of Appeal.
Service of the atto di precetto is considered the last step prior to enforcement proper.
We discuss in a separate article the ways in which a money judgment can be enforced in Italy.
This article was published on 9 March 2021. The law may change after that date and we may or may not revise this article to reflect such changes.
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.