Globalaw Dispute Resolution Initiative The Italian Torpedo – International Lis pendens May 6, 2014

Lis Alibi Pendens  Brussels Regulation - Council Regulation (EC) No 44/2001  Lugano Convention 2007 (European Community, Denmark, Iceland, Norway, Switzerland) As a general principle when lis pendens is detected, every court seised second must stay its proceedings until the court first seised has decided upon its jurisdiction (Art. 27 Brussels Regulation - Art. 27 Lugano Convention). This principle, known as the “first-come, first-served” rule, is designed to avoid irreconcilable judgements which may arise within the European Union and is conceived as a mechanic concept that rarely allows for exception.

Lis Alibi Pendens Abuse The first-come, first-served principle is very strict and the party which commences proceedings first has a competitive advantage. Some parties have used the filing for a declaratory judgment action or a nullity action in a Member State where the judicial proceedings are slow as a simple means to delay a forthcoming positive claim. This use (or rather abuse) of the lis pendens rule for the purpose of “sinking” proceedings in a competent court has become known as “the Italian torpedo”. (Franzosi, M. Worldwide Patent Litigation and the Italian Torpedo [1997] 7 European Intellectual Property Review). The “torpedo litigation” first appeared in relation with IP litigation. At present the torpedos are used in every area of tort litigation.

The Italian Torpedo

Is Italy still a place to launch a Torpedo? Italian courts are known to be very slow – especially in some of the southern parts of the country. In 2010 the average length of civil proceedings in first instance in the OECD area was around 240 days, but only 107 days in Japan, the best performer. About 420 days were required in Slovenia and Portugal and 564 days in Italy. The average length of a civil dispute going through all three instances was 788 days, ranging from 368 days in Switzerland to almost 8 years in Italy (OECD (2013), “What makes civil justice effective?”, OECD Economics Department Policy Notes, No. 18 June 2013). Italian rules of civil procedure are under a new reform to speed up the overall duration of the proceedings. At the moment the results of the reform cannot be fully evaluated.

Average Duration of a First Instance Proceeding in some Italian Courts Court YearsMonthsDays BARI2, BOLOGNA0, CAGLIARI1, CATANIA1, FIRENZE1, LAMEZIA TERME3, MESSINA2, MILANO0,89288 NAPOLI1, PATTI3, ROMA1, ROSSANO3, TORINO0,78256 TRENTO0,67225

How to avoid the Torpedo – Case Studies  Haus und Grund Litigation (Brussels Regulation)  Mr. X Litigation (Lugano Convention)

Haus und Grund Litigation Our firm and Goehmann Lawyers assisted a German client in a litigation brought by a competitor in the court of Messina. The plaintiff filed to obtain a negative declaration in connection with an infringement of the use of the Haus und Grund trademark. H&G filed a motion (Regolamento preventivo di giurisdizione) challenging the jurisdiction of the Italian court. Upon this motion the case was referred to the Italian Supreme Court (Corte di Cassazione) which is also entrusted with defining the jurisdiction (i.e., of indicating, in case of controversy, the court, either ordinary or special, Italian or foreign, which has the power to examine the case). The Court determined that the action brought by the plaintiff was a case of abuse of lis pendens and decided that the Messina Court had no jurisdiction on the case.

Mr. X Litigation Mr. X, a consultant, pending a criminal proceeding for fraud in Switzerland, filed a motion for negative declaration with the court of Milan. Mr. X asked the court to ascertain that there was no contractual liability vis-à-vis one of its clients following the client’s claim of fraud. The court of Milan determined that there was lis pendens and stayed the Italian proceeding in accordance with the Lugano Convention. Notwithstanding the different nature of the two proceedings - criminal and civil - the court decided that, since Mr. X’s client claimed for damages in the Swiss criminal proceeding, there was identity of claim and parties; therefore the Swiss proceeding had priority.

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