We will focus here on the most significant changes that require special attention, i.e., (i) shorter timeframe for defendants to defend themselves; (ii) the obligation for the parties to attend the first hearing; (iii) the need to use ADR procedures more broadly before filing a lawsuit in court; (iv) the new procedural expediting methods to complete proceedings quickly; and (v) the new monetary fines added to the CCP.
The decree essentially amended the entire structure of civil merits proceedings and introduced a new type of proceeding, known as “simplified proceedings.” This is expected to become the most widely used form, according to the purposes set forth by the Ministry of Justice.
Despite some uncertainty about the decree’s provisions in the early months of implementation of the new rules—due to the difficulty of combining the rules applicable until February 28, 2023, with those applicable as of March 1, 2023—the goals of the reform of civil proceedings in Italy are undoubtedly worthy. There has long been discussion of the need to take action to expedite civil proceedings, assist companies and individuals in obtaining enforceable decisions quickly so they can satisfy their claims, and further digitalize civil proceedings. Finally, the time seems to have come.
New ordinary proceedings on the merits
First, the decree requires parties already involved (or involved later) in civil proceedings to be more aware and react more quickly with regard to lawsuits, whether they file them or are sued by third parties. Companies will be required to streamline their internal procedures so that they react more efficiently when involved in a dispute. Indeed, the biggest change is that the timeline for a defendant to present its defense is shortened and major preliminary activities are condensed to take place before the first hearing.
The decree dictates that the first hearing must be scheduled at least 120 days after the day when the defendant is served the summons (150 days if served abroad).
Prior to the decree, a defendant usually had to formally appear within 20 days before the hearing and basically had at least 70 days to prepare its defense. Under the decree, the defendant will have only 50 days to appear. Additionally, the statement of defense will need to contain, among others, all defensive arguments, requests for authorization to join third parties, and exhibits and preliminary requests to meet the evidentiary burden. Thereafter, prior to the first hearing, the parties will exchange three supplementary briefs where they will have an opportunity to (i) specify demands already submitted to the court; (ii) challenge each other’s arguments; and (iii) bring additional evidence to the court’s attention, if needed.
The 50 days following service of the summons will be critical for defendants, as during that time they will need to prepare their defenses and collect evidence. Less time to prepare means companies must manage litigation more efficiently, especially when multiple teams and departments need to gather evidence. Responding to the plaintiff’s arguments and quickly coordinating company departments and in-house and external counsel will be key to success.
Notably, although the parties first meet with the judge at the first hearing, the decree provides that the judge must perform preliminary activities in the 15 days after the statement of defense is filed. These include assessing the proper service and timely appearance of the defendant, and if necessary the judge may declare a summons null and void or authorize a defendant to join third parties.
Second, the parties must attend the first hearing in person so that the judge may attempt to reach a settlement. This may be burdensome in certain situations, such as when the parties reside abroad or are unable to attend for other reasons. If the plaintiff or the defendant is a company (especially a foreign company) represented by its legal representative in the proceedings, that, too, may be difficult to coordinate.
The decree does not levy monetary penalties for parties failing to attend the first hearing, and to date courts have not released guidelines on how to comply with this provision if unable to attend. One potential option available to the parties unable to attend the first hearing in person may be to be replaced by their respective attorneys. Alternatively, courts may order the in-person hearing to be replaced by an online videoconference, which would make it easier for individuals residing abroad to attend. All will be watching closely in the coming months to see how this provision is interpreted and applied by the courts.
Another scenario would make these changes under the decree even more complex, especially for companies. In some cases, Italian law does not consider it sufficient to have a representative authorized to represent the company via special or general power of attorney at the proceedings. Instead, it requires the company to be represented by a person with the power to act as the company (i.e., statutory agent, registered agent, and the like). If the courts maintain that a company must appear at the first hearing “in person” through a statutory agent, company charters may need to be changed to appoint representatives in Italy.
Third, the decree seeks to increase the use of ADR procedures, specifically mediation. It expands the number of areas where parties must attempt to reach a settlement before bringing the proceedings before the courts. Thus, in the event of a dispute a private party or company whose business (or some of its business) falls under one of the following must now undertake an out-of-court proceeding before suing the other party:
- agreements for the production of product or service;
- network agreements;
- supply agreements;
- partnerships and sub-supply agreements.
New procedural expediting methods
Fourth, the decree introduces procedural methods that can be used by parties throughout the proceedings to expedite a decision. The methods fall into two categories: either designed to uphold demands that are clearly well-founded (especially when compared to the opponent’s weak defenses), or designed to obtain rejection of demands that are clearly unfounded. A decision that ends the proceedings via an expedited method will have a more limited effect than a traditional judgment. An expedited decision cannot become res judicata and its authority cannot be invoked in future proceedings, as it is open to further review if the losing party undertakes a new proceeding on the merits. The idea is to conclude proceedings in a short timeframe. The interested party will see clearly unfounded opposing claims rejected or receive an immediately enforceable title when strong grounds exist. Accordingly, these changes will help parties, as they will no longer be affected by the uncertainty of whether proceedings will drag on for a long time.
New monetary fines added to the CCP
Last, the decree adds monetary fines for parties to the proceedings (and for parties not acting as plaintiff or defendant). The CCP now levies a monetary fine against a party that fails to comply with a judge’s order that a piece of evidence be submitted. A party that fails to comply with such an order without reasonable grounds may be fined 500 to 3,000 EUR. A third party that is not a party to the proceedings that fails to comply with such an order without reasonable grounds may be fined 250 to 1,500 EUR. In short, the decree requires parties to the proceedings (and other parties) to respond promptly, expediting their efforts to gather the requested evidence or records, under threat of financial penalty.
These are just some of the most significant changes implemented by the decree. Other instances (appellate proceedings and proceedings before the Supreme Court of Cassation) have also been affected by this extensive reform. During these months right after implementation of the new CCP provisions we will continue to watch closely to see how courts apply the new rules in the decree and develop further procedural strategies in the interests of parties involved in civil disputes in various ways.