Italy
1. Are freezing orders (or their equivalent referred to below) available in civil legal proceedings in this jurisdiction and what is their effect?
Yes. There are two main types of freezing order: judicial seizure orders and conservative seizure orders. Both prohibit the respondent from dealing with assets referred to in the order until a specified time (for example, judgment) or further order of the Court. The main difference between the two is that:
(a) judicial seizure orders cover:
(i) specific assets when there is a dispute over their ownership; and
(ii) specific evidence when there is a dispute over disclosure of a document or other item; whereas
(b) conservative seizure orders cover all of a respondent’s assets up to a specified amount to prevent their dissipation and to ensure satisfaction of a future money judgment.
In both cases, the order may have domestic or worldwide effect (subject to the laws of the relevant jurisdiction).
2. Are other interim orders commonly made in conjunction with a freezing (or equivalent) order?
No.
3. Briefly what is the relevant legal test?
(a) Judicial seizure:
(i) there is a dispute over the ownership of an asset or over the right to obtain disclosure of a document or other item as evidence;
(ii) the applicant has a good arguable case in the underlying substantive claim or prospective claim; and
(iii) it is appropriate in the circumstances that the relevant asset or item be temporarily held by a custodian.
(b) Conservative seizure:
(i) the applicant has a good arguable case in the underlying substantive claim or prospective claim;
(ii) the respondent has assets;
(iii) there is a real risk of unjustified dissipation (for example, for the purposes of frustrating or impeding the satisfaction of a judgment or award); and
(iv) it is just and convenient to grant the order.
4. Briefly what is the process for obtaining a freezing (or equivalent) order?
In both cases, the applicant makes an application to the Court, setting out the reasons for the application and the basis on which the relevant test is met. For judicial seizure orders, the applicant must specify the assets which it proposes should be subject to the order.
Both applications can be made with or without notice to the respondent. Where it is made without notice, the Court may issue an interim freezing order and there will be a later return hearing at which the respondent can challenge the interim freezing order assuming it is made. Applicants making without notice applications for freezing orders have a duty of good faith, and there may be costs sanctions if that duty is breached.
5. Does the applicant have to provide any form of security or commit to compensation if its claim is ultimately unsuccessful and any freezing (or equivalent) order granted causes loss and damage to the respondent?
The Court has a discretion to require the applicant to provide security. The Court will have regard to the applicant’s financial position when determining whether to exercise that discretion.
6. Can it be sought against third parties?
Yes, a third party to the underlying proceedings or prospective proceedings can be made a party to a freezing order where it holds or has purchased the assets in question. Equally, a third party which is not a party to the freezing order (for example, a financial institution holding the respondent’s assets) which is notified of it in writing (typically by the Court bailiff) is required to comply with the instructions set out in the freezing order and is prohibited from permitting or assisting in the breach of the freezing order.
7. What assets are covered by a freezing (or equivalent) order?
(i) Judicial seizure order: movable and immovable assets, businesses, documents or other items.
(ii) Conservative seizure order: movable and immovable assets and sums of money or goods owed to the applicant.
In both cases, assets may be located within the jurisdiction (a domestic freezing order) or outside the jurisdiction (a worldwide freezing order).
8. Can a freezing (or equivalent) order be made in support of substantive proceedings abroad?
Yes, on the condition that the freezing order has to be enforced in Italy, i.e. the subject assets or evidence must be located in Italy.
9. Can a freezing (or equivalent) order be made in support of arbitration proceedings or awards?
Yes.
10. At what stage of proceedings can a freezing (or equivalent) order be sought?
At any stage, including prior to commencing the claim, during the proceedings or (in exceptional circumstances) following judgment to assist with enforcement.
11. Are there typically any exceptions to the general prohibition on the respondent’s use of assets subject to a freezing (or equivalent) order?
There are no standard exceptions to the general prohibition on the respondent’s use of assets subject to a freezing order. The respondent must either obtain the Court’s permission to use those assets, or have them removed (in whole or in part) from being subject to the freezing order.
12. What happens after a freezing (or equivalent) order is granted?
The applicant will typically notify the respondent and any third parties which might hold the respondent’s assets. Assuming the original freezing order was obtained without notice, there will be a return hearing at which the respondent may challenge the freezing order. At this point the original freezing order will usually either be set aside or extended.
The freezing order must be executed within 30 days of it being granted. Freezing orders are typically executed by the Court bailiff who serves the order on the owner of the assets (in case of seizure of movable goods), serves the order on the third party (in case of seizure of receivables) or register the order in the Land Registry (in case of seizure of real estate). If the procedure is carried out prior to commencing the claim, the Court will set a deadline of no more than 60 days within which proceedings must be commenced, failing which the freezing order will become ineffective.
13. Who pays the costs of the application for a freezing (or equivalent) order?
The applicant pays the costs of the application, although the Court will usually order the losing party in the underlying litigation to pay a contribution to the other party’s costs and expenses of the application.
14. What protections are there typically in a freezing (or equivalent) order for third parties to such orders?
(i) A third party is not prevented from exercising any rights of set-off arising prior to its notification of the freezing order.
(ii) A third party may claim reimbursement of the costs incurred as a result of the freezing order and, in the event that this claim is not granted, may bring an ordinary action against the applicant.
(iii) If the freezing order operates on a bank account, the third party bank will be appointed as custodian of the money in the account whereby it must manage the assets in the interests of justice. It must also comply with its legal and professional diligence obligations in this role, otherwise it could be liable for damages. This may include making the relevant enquiries before permitting withdrawals which appear to be permitted by the freezing order.
15. What are the consequences of breach of a freezing (or equivalent) order?
Breach of a freezing order by the respondent or a third party knowingly or, in certain circumstances, negligently constitutes an offence and may result in imprisonment or a fine, as well as compensation for damages. Seizure of assets may also be possible depending on the specific facts.
16. Does a third party notified of (but not a party to) a freezing (or equivalent) order owe a duty of care to the applicant (meaning it can be liable to the applicant for non-compliance)?
Yes. The third party notified of a freezing order owes a duty of care to the applicant and can be liable to the applicant for non-compliance.
17. Can a freezing (or equivalent) order be enforced abroad?
In principle and subject to some exceptions, a freezing order can be enforced abroad subject to the laws of the relevant jurisdiction.
18. Can freezing (or equivalent) orders from overseas jurisdictions be enforced in this jurisdiction?
In general and subject to some exceptions, no (except for freezing orders made in the EU).
Contacts
Simone Barnaba Partner Eversheds Sutherland Milan, Italy simonebarnaba@eversheds-sutherland.it www.eversheds-sutherland.com Renato Fiumalbi Partner - Head of Litigation, Arbitration, Insolvency Eversheds Sutherland Milan, Italy renatofiumalbi@eversheds-sutherland.it www.eversheds-sutherland.com Deborah Borghi Partner Eversheds Sutherland Milan, Italy deborahborghi@eversheds-sutherland.it www.eversheds-sutherland.com
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