The Italian Supreme Court on the Recognition of Foreign Judgments Awarding Punitive Damages

The author of this post is Caterina Benini, post-doctoral researcher and adjunct professor at the Catholic University of the Sacred Heart in Milan.

The recognition and enforcement of foreign punitive damages judgments in Italy is no longer considered anathema. In 2017, overturning its previous opposition, the Joint Sections of the Italian Supreme Court held that “the institute of punitive damages of US origin is not ontologically incompatible with the Italian legal order” and laid down the conditions under which foreign judgments awarding non-compensatory damages may be recognised and enforced in Italy (judgment No. 16601 of 5 July 2017).

Since that landmark ruling, Italian courts have been confronted with this issue only sporadically. One such occasion arose a few months ago, when the Supreme Court delivered its judgment No. 31244 of 30 November 2025.

Background

Insolvency proceedings were commenced before the US Bankruptcy Court for the Northern District of California against the Californian corporations Cecchi Gori Pictures and Cecchi Gori USA Inc. Following those proceedings, which resulted in the companies’ reorganisation, Cecchi Gori Pictures and Cecchi Gori USA Inc. brought an action before the same Court against two Italian citizens, G.N. and G.I. The claimants alleged that the defendants had fraudulently transferred company assets and sought an award for damages.

On 6 February 2020, the California Court upheld the claim and ordered G.N. and G.I. to pay a total amount exceeding USD 21 million. This sum comprised USD 6 million in actual damages, corresponding to the value of the assets fraudulently transferred; USD 12 million in treble damages pursuant to Section 496(c) of the California Penal Code; nearly USD 3 million in interest.

In the context of their reorganisation, Cecchi Gori Pictures and Cecchi Gori USA Inc. assigned their claims against G.N. and G.I. to the Italian company J-Invest Spa, which subsequently sought recognition and enforcement of the Californian judgment in Italy.

By judgment of 28 October 2024, the Court of Appeal of Rome held that the Californian judgment of 6 February 2020 satisfied all requirements for recognition and enforcement of foreign judgments set out in Article 64 of Law No. 218 of 1995, the Italian Private International Law Act (PILA).

G.N. and G.I. challenged the decision before the Italian Supreme Court. They argued, inter alia, that the US judgment was contrary to Italian public policy because it (i) awarded punitive damages without a normative basis ensuring the foreseeability of both the circumstances in which such damages can be awarded and their maximum amount, and (ii) awarded interest allegedly amounting to usury, which constitutes criminal office under Italian law.

The Supreme Court’s Judgment

The first Section of the Italian Supreme Court dismissed the challenge and upheld the decision of the Court of Appeal of Rome.

With regard to the compatibility of US punitive damages judgments with Italian public policy, the Court began by recalling that several Italian provisions exist that provide for private law pecuniary sanctions with punitive and deterrent functions. The latter provisions exist alongside ordinary rules on tort, which still predominantly serve a compensatory function. In light of this evolution of Italian private law, the Court held that the punitive purpose of civil law sanctions is no longer incompatible with fundamental principles of the Italian legal order. It nevertheless reiterated that any punitive or deterrent sanction under civil law must be grounded on statutory basis, in accordance with Article 23 of the Italian Constitution, which provides that no personal or financial obligation may be imposed except by law.

The Court further observed that, under Italian law, the compensatory function of civil liability encompasses not only compensation for actual loss, but also for loss of earnings resulting from a contractual breach and for non-pecuniary damage arising therefrom. On this basis, the Court noted that, had an administrator of an Italian company fraudulently transferred company assets, thereby exposing the company to insolvency proceedings – as occurred in the case decided by the Californian court – the company would have been entitled not only to compensation for the value of the unlawfully transferred assets (actual loss), but also for lost earning opportunities due to the fraudulent transfer of assets (loss of earnings) and for damage to its reputation and image (non-pecuniary loss).

Turning to the recognition of foreign punitive damages judgments, the Court recalled, in line with the 2017 ruling of the Joint Sections, that foreign punitive damages judgments can be recognised if, in the country of origin, they have been rendered on normative bases which specifically provide the cases in which punitive damages may be awarded (requirement of typicality) and which provide for some quantitative limitations of the amounts that may be ordered (requirement of foreseeability).

Applying these criteria to the case at hand, the Court concluded that the award of approximately USD 12 million in punitive damages satisfied both the typicality and foreseeability requirements. The Californian judgment had awarded treble damages pursuant to Section 496 (c) of the California Penal Code, which, in relation to the offence of receiving stolen property under Section 496 (a), provides that “[a]ny person who has been injured by a violation of subdivision (a) or (b) may bring an action for three times the amount of actual damages, if any, sustained by the plaintiff, costs of suit, and reasonable attorney’s fees”.

The Supreme Court concluded that in the circumstances the punitive damages were based on a specific legal provision, enabling individuals to foresee both the awarding of punitive damages and their precise amount. The Californian Court had classified the value of the fraudulently transferred assets as “actual damages” and had determined the amount of treble damages accordingly, resulting in an award amounting to twice the actual damages.

The Court further rejected the appellants’ contention that the punitive damages were disproportionate. In its view, proportionality had already been assessed ex ante by the Californian legislator when enacting Section 496 (c) of the Penal Code, taking into account the seriousness of the offence for which treble damages may be awarded.

As to the allegation that the interest awarded amounted to usury, the Court dismissed this argument on the ground that the interest was based on Section 3287 of the Civil Code of California.

For all these reasons, the Supreme Court concluded that “the Californian judgment complies with the conditions identified by the Joint Sections of the Supreme Court in 2017, namely … the requirements of typicality and foreseeability, and, therefore, as correctly held by the Court of Appeal, does not produce effects contrary to public policy”.

Comment

As noted, since the landmark 2017 ruling of the Joint Sections of the Supreme Court, Italian courts have seldom dealt with foreign judgments awarding punitive damages. When such a a case eventually reached the Supreme Court, the Court did not seize the opportunity to further clarify the conditions laid down in 2017.

Several aspects of the 2025 judgment appear problematic.

First, the Court devoted considerable attention to the evolution of civil liability under Italian law and its emerging deterrent and punitive functions, rather than focusing squarely on the decisive issue before it: the conditions governing the recognition and enforcement of foreign punitive damages judgments in Italy and their application to the case at hand.

This disproportionate emphasis on national private law rather than on the private international law framework for the recognition of foreign punitive damages judgments – an imbalance that mirrors the trend within Italian legal scholarship to address punitive damages primarily from a private rather than a private international law perspective – appears to explain why the Supreme Court applied only one of the two conditions laid down by the Joint Sections in 2017.

As described above, the Court applied the requirements of typicality and foreseeability, which are the two prongs of the legality condition. Under this condition, the Court must verify that “the law upon which the foreign judgment is based must specifically provide the cases for the awarding of punitive damages (typicality) and for some quantitative limitations of the amount that can be ordered (foreseeability)” (Judgment No. 16601/2017, para 7).

By contrast, the Court failed to engage with the proportionality condition, under which the requested court must verify that, in the foreign judgment, “there is proportionality between compensatory damages and punitive damages and between punitive damages and the conduct of the wrongdoer” (Judgment No. 16601/2017, para 7).

While the Court briefly referred to proportionality when rejecting the appellants’ claim that the damages awarded were disproportionate, it appears to have resolved the issue by reference to the legality condition, rather than by conducting an autonomous proportionality assessment. Even assuming that the Court intended to apply the proportionality condition, it did not do so in the manner envisaged by the Joint Sections.

According to the 2017 judgment, proportionality requires that punitive damages be proportionate both to the compensatory damages awarded and to the seriousness of the conduct sanctioned. Neither of these two aspects had been examined by the Supreme Court. This is unfortunate. A proper application of the proportionality condition could have clarified some unresolved issues on which scholars remain divided and which case law has yet to address.

One such issue is whether the proportionality of punitive damages awards is to be measured from the perspective of the legal order in which the foreign judgment originates or the legal order of the requested court (the Italian legal order). The Joint Sections did not clarify this point in 2017. In this author’s view, if the principle of proportionality forms part of Italian public policy and constitutes a prerequisite for recognition of foreign punitive damages awards, the assessment of proportionality of punitive damages must necessarily be conducted according to standards of Italian law. It is for the legal order that considers a given principle as part of its public policy to determine its content and to regulate its practical operation.

From this perspective, the Supreme Court’s statement that proportionality was assessed ex ante by the Californian legislator does not address whether the punitive damages awarded comply with the Italianstandard of proportionality. Such an assessment would have been relatively straightforward in this case. The Court should have examined whether punitive damages amounting to USD 12 million – twice the compensatory damages of USD 6 million – meet Italian proportionality standards. Italian legislation and case law offer no clear guidance on what ratio between punitive and compensatory damages may be considered proportionate. The Supreme Court missed the opportunity to elaborate on this matter with the 2025 judgment.

A second controversial issue concerns how requested courts should determine whether punitive damages are proportionate to the wrongdoer’s conduct, particularly when the foreign judgment does not clearly spell out the relevant facts of the case. In such cases, the requested courts should, in this author’s view, infer the relevant factual background from the foreign judgment itself without considering additional facts alleged by the parties during the exequatur proceedings but not resulting from the foreign judgment. Doing otherwise would risk transforming exequatur proceedings into appeal proceedings.

Another unsettled question is what the requested court should do when punitive damages are found to be disproportionate. Should the court recognise only the part of judgment awarding compensatory damages, provided that this portion of judgment is separable and autonomous from the punitive damages one? Or should it recognise the whole compensatory damages, together with punitive damages reduced to a proportionate amount?

The latter solution, often referred to as reductive partial recognition insofar as it entails a reduction of the punitive damages to be recognised and enforced, appears to have been endorsed by the CJEU in Real Madrid. In this decision (reported on this blog here), the CJEU held that recognition should be refused only for the manifestly disproportionate portion of the judgment (para 73).

It is doubtful whether such solution is consistent with the prohibition of review of the merits of foreign judgments. This prohibition constitutes a general principle governing the recognition and enforcement of foreign judgments. It applies to the recognition by Italian courts of civil and commercial judgments delivered by other EU Member States (Article 52 of the Brussels I bis Regulation), by non-EU States that are Contracting Parties to the Hague Judgments Convention (Article 4(2) of the Hague Judgments Convention), and by all other States (Articles 64 and 73 of PILA, to be read together with the now abrogated Article 798 of the Code of Civil Procedure).

Pursuant to such prohibition, the requested court cannot refuse to recognise a foreign judgment only because the conclusion it would have reached is different from the one reached by the foreign court. Yet this is precisely what would occur under reductive partial recognition. By recognising the portion of the punitive damages award it considers proportionate, the requested court refuses to recognise the whole amount of punitive damages on the ground that it exceeds the sum the requested court itself would have granted had it decided the case applying the same foreign punitive damages law but according to its own standard of proportionality. In other words, the requested court would rewrite the head of judgment devoted to punitive damages, using its own measurement of proportionality. This would amount to an impermissible review of the merits of foreign judgments.

This view appears to find indirect support in the Hague Judgments Convention. Article 10 provides that “[r]ecognition or enforcement of a judgment may be refused if, and to the extent that, the judgment awards damages, including exemplary or punitive damages, that do not compensate a party for actual loss or harm suffered”. This provision must be read in conjunction with Article 9, which states that “[r]ecognition or enforcement of a severable part of a judgment shall be granted where recognition or enforcement of that part is applied for, or only part of the judgment is capable of being recognised or enforced under this Convention”. A combined reading of these two provisions – which mirror Articles 11(1) and 15 of the Hague Choice of Court Convention – suggests that, where the requested court intends to deny the recognition of a foreign judgment that awards punitive damages, it should deny recognition of the operative part of the judgment awarding punitive damages while it should recognise the part of judgment awarding compensatory damages, provided that such portions are severable and autonomous one from the other. If this is not the case, the foreign judgment should be denied recognition in full.

Finally, the Supreme Court’s approach to the issue of interest is unconvincing. The appellants argued that the interest awarded amounted to usury, which constitutes a criminal offence under Italian law. Instead of addressing whether the prohibition of usury forms part of Italian public policy, the Court addressed the interest award by reference to the legality condition above described applicable to punitive damages. It remains unclear whether by doing so the Court implicitly treated the interest in question as punitive in nature, thereby considering necessary to subject the recognition of the interest award to the same conditions applicable to punitive damages award.

A more persuasive approach would have been to determine whether the prohibition of usury constitutes a principle of Italian public policy and, if so, whether the effects of recognising the interest award would conflict with that principle.