Italy

Italy

Last updated 31/08/2020
Summary of developments:
  • Ikebiri Community v. ENI: case settled (May 2019).
  • Government’s National Action Plan announced a review of commercial and civil law to assess the introduction of a “duty of care” or due diligence for companies (2016).
  • Legislative Decree no. 231/2001 establishes liability of parent company in criminal law, including for human rights violations (2001).

Legislative Developments

Legislative Decree No. 231/2001 for administrative criminal liability

 

In a nutshell

In more detail

Name of Legislation

Legislative Decree No. 231/2001

Legislative Decree on administrative (criminal) liability of legal persons

Area of Law

Criminal law

The law introduces criminal liability for companies and legal entities.

Jurisdiction

National

 National

Current Stage

In force

“Comprehensive study” to assess its scope and adapt to the UNGPs (announced as part of the National Action Plan on Business and Human Rights in 2016).

Requirement

Legal entities may be liable when a crime is committed in their interest or to their advantage.

Liability accrues the following requirements are met:

i) The crime is included in the exhaustive list provided by the Decree;

ii) The crime has been committed with the participation of an employee/manager of the legal entity;

iii) The crime has been committed in the interest or to the advantage of the company.

In order to avoid incurring liability, the company shall demonstrate that:

a) It has efficiently adopted a "model of organisation, management and control" with the potential to prevent the crime that occurred, and

b) It has established an internal body entrusted with monitoring and supervising compliance with this model.

Material Scope

Criminal offences, including specific human rights violations and environmental crimes.

The scope of the Legislative Decree has been amended several times. It currently includes specific Human Rights violations (Art. 24 and following).

Among others: female genital mutilation, slavery, human trafficking, forced labour, juvenile prostitution and pornography, manslaughter or serious bodily harm committed in breach of laws governing the safeguarding of workplace health and safety, employment of illegally staying third-country nationals, and environmental crimes (such as environmental disaster, environmental pollution, failure to decontaminate, etc.).

Reach of the requirements

May apply to the entire supply chain, including subsidiaries operating abroad.

According to the Decree, the parent company may be considered accountable for the crimes committed by other members of the corporate group, provided that a natural person acting on the parent company's behalf and pursuing its interests also participated in the crime.

Corporate liability may also accrue for human rights abuses committed by Italian enterprises operating abroad, especially if part of violations that occurred in Italy and if the state where the offence occurred has not yet initiated proceedings.

Enforcement

Criminal liability is enforced through administrative fines and disqualification measures.

Fines are assessed on the severity of the act, the degree of liability on the part of the body, and the activity performed to eliminate or mitigate the consequences of the act in order to prevent the commission of further unlawful acts.

Fines are applied for quotas no lower than one hundred and no greater than one thousand. Amounts range from no less than 258,000 Euros to a maximum amount of 1.549,000 Euros.

Pros

The provision raised awareness among companies about prevention of eventual offences, in accordance with the objectives of human rights due diligence.

It establishes parent company liability and puts the burden on companies to prove that they have efficiently:

• Adopted a "model of organisation, management and control" able to prevent the crime that occurred;

• Established an internal body entrusted with monitoring and supervising compliance with the model.

Cons

Still limited to criminal liability.

Requires the participation of a parent company’s employees or staff.

The scope of the law is still limited to human rights violations codified as criminal offences.

In order to establish parent company liability for the acts of a subsidiary, an employee/manager of the latter must have participated in the commission of the offence and have acted in the corporation's interest. It remains difficult to prove the involvement and the interest.

Broader Application to Other Sectors

NAP 2016 mentions possible broadening of the scope and application of the Decree.

NAP 2016 mentions a "comprehensive study" of the Decree 231 in order to evaluate its potential extension of the scope and application of the administrative liability of legal entities.

Resources

♦ Overview of the legislative Decree by the Human Rights International Corner (HRIC) (2019).

Case Law

Ododo Francis v. ENI

 

In a nutshell

In more detail

Name of the case

Ikebiri Community v. ENI

Ododo Francis (as representative of the Ikebiri Community) v. ENI and NOAC (Nigerian Agip Oil Company, ENI Nigerian subsidiary)

Area of Law

Environmental, Tort law

Negligence

Jurisdiction

Court of Milan - Italy

Heard in the Court of Milan, applying Nigerian tort law

Current Stage

Settled

On 21 May 2019, the Italian Court closed the lawsuit due to abandonment by the parties.

Claim

Original request to the court: Claimants asked for clean-up and compensation for damages caused by NAOC's 2010 oil spill.

Original claim: The community has asked the court to ascertain the responsibilities of the parent company, ENI, and its subsidiary in Nigeria, for an April 2010 oil spill, according to Nigerian tort and environmental law. The claimants asked for compensation in the amount of at least 689,198,400 Naira (approximately €2 million). They had also requested that the defendants be required to clean up the polluted area and reduce the pollution levels to below the threshold prescribed by Nigerian law (50mg/kg).

Result

No court ruling (settled)

There has been no court ruling because the indigenous community accepted an out-of-court settlement offered by ENI and NAOC in 2018.

Details of the extrajudicial settlement:

  • For the indigenous community: compensation (€20,000); a series of projects of community interest to be funded and maintained by ENI: 4 kilometres of asphalt road, health dispensary, access to electricity.
  • For ENI: no duty to clean-up and restore the polluted areas

Reach of the requirements

Throughout supply chain

If the parent company is held liable for the oil spill caused by its subsidiary, it would mean that it has a duty of care for the entire corporate structure.

Enforcement

Not applicable

No judicial enforcement. The extrajudicial settlement has already been correctly executed.

Pros

The extrajudicial settlement has been, in part, a good solution for the indigenous community.

The indigenous community didn't have to go through an entire, expensive lawsuit until the end, and obtained a convenient settlement. The litigation was, however, a key factor in ensuring the settlement took place.

Cons Lack of court ruling recognising the principle of parent company's duty of care over its subsidiaries and towards communities affected by its business operations.

If the parent company (ENI) would have been held liable for the oil spills caused by its subsidiary (NAOC), it would have meant that the parent company has a duty of care for its entire corporate structure, thereby providing a strong incentive for the future compliance with due diligence and environmental standards.

The Italian judgment stating such a principle would have been pioneering and would have served as a precedent for other judicial cases in Italy and other jurisdictions.

Broader Application to Other Sectors

The recognition of the parent company's duty could be extrapolated to other similar cases.  

Companies based in Italy could be held liable for acts committed by their subsidiaries in other countries.

Resources

♦ FoEE summary of the case

♦ FoEE coverage of the settlement

Policy developments

National Action Plan

The National Action Plan adopted by the government in 2016 recommends in the "Planned measures" section to foster the implementation of the United Nations Guiding Principles on Business and Human Rights to:

  • "Conduct a comprehensive review of the existing commercial and civil law to assess and evaluate legislative reform introducing provisions such as the ‘duty of care’ or due diligence for companies".

In particular, it includes:

  • "Conduct a comprehensive study of the Law 231/2001 in order to evaluate potential extension of the scope and application of the administrative liability of legal entities".

Resources

National Action Plan (English).

♦ NAP’s assessment by the Human Rights International Corner (HRIC).

  • Law
  • Legal Case
  • Policy development