Recognition and Enforcement of Punitive Damages Awards in Italy: A Landmark Decision by the Italian Supreme Court

On 30 November 2025, the Italian Supreme Court (Corte di Cassazione) delivered a significant judgment that further clarifies the Italian approach to the recognition of foreign judgments awarding punitive damages. The Supreme Court upheld the Rome Court of Appeal’s decision to recognise a Californian judgment condemning two Italian nationals to pay treble damages pursuant to Section 496(a) and (c) of the California Penal Code for the misappropriation of assets from debtor companies in bankruptcy proceedings. This ruling is particularly relevant for asset recovery practitioners, as it demonstrates the evolving approach of Italian courts toward foreign judgments with punitive or deterrent functions.

Factual Background

The case arose from bankruptcy proceedings against California-based companies, which were subject to Chapter 11 proceedings before the United States Bankruptcy Court for the Northern District of California. The Californian court, in a judgment dated 6 February 2020, awarded the companies USD 21,176,199.00 in damages against two Italian defendants, comprising USD 6,084,277.60 in actual damages for asset misappropriation, USD 12,168,555.20 in treble damages pursuant to Section 496(a) and (c) of the California Penal Code, and USD 2,923,366.17 in prejudgment interest.

Following the restructuring plan, the companies assigned the credit to distressed asset fund, which subsequently sought recognition of the Californian judgment in Italy.

The Legal Framework

Under Italian private international law (Law No. 218/1995), the recognition of foreign judgments may be refused if their effects are contrary to public policy (ordine pubblico) . The concept of international public policy encompasses fundamental constitutional principles, values recognised at international and supranational level, including those enshrined in the EU Charter of Fundamental Rights and the European Convention on Human Rights.

 

The Defendants’ Arguments

The defendants challenged the recognition on several grounds:

1. That punitive damages are incompatible with Italian public policy, as Italian law recognises only a compensatory function for civil liability, not a punitive, sanctioning or deterrent function as found in common law systems;
2. That the Californian judgment was rendered on legal bases that did not guarantee the typicality of conviction scenarios, predictability of the award, or quantitative limits;
3. That the foreign judgment lacked adequate reasoning necessary to assess compatibility with Italian public policy;
4. That procedural irregularities in service of process and absence of a valid power of attorney violated the right to defence and the principle of effective adversarial proceedings;
5. That the award was disproportionate and comparable to usurious interest prohibited under Italian criminal law.

 The Supreme Court’s Analysis 

1. The Polyfunctional Nature of Civil Liability

The Supreme Court fundamentally rejected the premise that civil liability serves exclusively compensatory purposes in Italian law. The Court noted that a plurality of provisions in the Italian legal system assign to damages or monetary obligations a broadly punitive, dissuasive, deterrent or coercive function, including Article 96(3) of the Code of Civil Procedure, Article 473-bis.39, Article 614-bis of the Code of Civil Procedure, and Article 28 of Legislative Decree No. 150/2011.

The Court acknowledged that alongside the predominant and primary compensatory-reparative function, civil liability has emerged in recent years as polyfunctional, projecting toward multiple areas, particularly preventive (or deterrent or dissuasive) and sanctioning-punitive functions, in order to respond to emerging needs.

2. Compatibility with Public Policy

The Court clarified that the principle of public policy emerging from the Italian legal system is not a prohibition against assigning damages a deterrent or punitive function, but rather a prohibition against imposing obligations that lack a legal basis.

Following the landmark 2017 decision of the United Sections (Case No. 16601/2017), the Court reiterated that punitive damages are not per se incompatible with the Italian legal system, provided that recognition corresponds to the condition that the foreign judgment was rendered on legal bases that guarantee the typicality of conviction scenarios, predictability of the award, and quantitative limits.

3. Application to the California Treble Damages Provision

The Court examined Section 496(c) of the California Penal Code, which provides that any person injured by certain violations may bring an action for three times the amount of actual damages sustained, plus costs and reasonable attorney’s fees .

The Court found that the Californian judge applied positive law provisions—one from the penal code concerning damages obtainable as a consequence of criminally relevant conduct, and another from the civil code (interest). The treble damages therefore have a specific, codified legal basis and make the economic consequences entirely predictable and unequivocal for those who commit the actions described in the statute .

The Court observed that while the Californian legal system operates a similar choice regarding the basic principle (damages are not limited to the loss suffered by the creditor), it differs in quantification methodology. Rather than requiring concrete proof of further losses, the law determines ex ante, within a provision that clearly has punitive as well as compensatory purposes, the additional damages beyond the actual loss.

The Court concluded that proportionality was assessed ex ante by the Californian legislature in relation to the gravity and wrongfulness of the conduct, the award was predictable based on simple mathematical calculation, and the quantitative limits were predetermined by law.

4. Adequacy of Reasoning

The Court held that brevity or even absence of reasoning does not preclude recognition if the judgment is final and the right to adversarial proceedings has been respected. The Californian court described the facts (misappropriation of over six million dollars), recorded the evidentiary outcomes (failure to comply with disclosure orders), and identified the procedural and substantive rules applied, thereby clearly identifying the factual and legal grounds and the national provisions applied. 

5. Procedural Safeguards

Regarding alleged violations of the right to defence, the Court emphasised that the validity of service and representation must be assessed according to Californian law, not Italian law, as Article 64(b) of Law No. 218/1995 requires verification that the initiating document was brought to the defendant’s attention in conformity with the law of the place where the proceedings took place and that essential rights of defence were not violated .

The Court noted that the defendants received the initiating document via their private email, forwarded it to their Californian attorney, who raised a nullity objection, leading to a procedural agreement authorising service via email, approved by the Californian court. This corresponded to judicial practice in California in conformity with state laws permitting courts to order service through methods not prohibited by international agreement and deemed suitable to ensure receipt.

The Court found that the Californian court had no doubt that the attorney was authorised under lex loci to represent the parties, raise the service nullity objection, and reach an agreement on service, noting that conferral of mandate and issuance of written power of attorney are not necessarily coincident, and not all jurisdictions require written powers for all procedures .

Implications for Asset Recovery

This judgment has significant implications for practitioners engaged in cross-border asset recovery:

6. Broader Recognition Framework: The decision confirms that Italian courts will recognise foreign judgments with punitive or extra-compensatory elements, provided they meet the established criteria of legal basis, typicality, predictability and proportionality.
7. Statutory Treble and Multiple Damages: Statutory provisions for treble or multiple damages based on actual losses—common in US federal and state law—are likely to satisfy Italian public policy requirements, as they provide clear legal bases and mathematical certainty.
8. Flexibility in Procedural Recognition: Italian courts will apply a functional approach to procedural requirements, respecting the lex fori for service of process and representation formalities, provided essential rights of defence are safeguarded.
9. Bankruptcy and Insolvency Context: The judgment demonstrates willingness to recognise substantial damages awards in cross-border insolvency proceedings, facilitating recovery of misappropriated assets from company directors and administrators.
10. No Merits Review: Consistent with private international law principles, Italian courts will not review the substantive correctness of foreign judgments, focusing instead on compatibility with fundamental procedural and substantive principles.

Conclusion

The Supreme Court’s synthesis establishes that punitive damages are not incompatible with Italian law, given that civil liability can serve multiple functions, and the deterrent and dissuasive function is recognised alongside the compensatory-restorative function, albeit through necessary legislative intermediation. Recognition of a foreign judgment containing such an award—specifically, a conviction under the California Penal Code to treble damages equal to three times the loss suffered by the creditor—does not produce effects contrary to public policy because it was rendered on legal bases guaranteeing typicality, predictability and quantitative limits .

This landmark decision strengthens Italy’s position as a jurisdiction willing to facilitate cross-border asset recovery through recognition of judgments that combine compensatory and deterrent functions, provided they meet fundamental rule-of-law criteria. Asset recovery practitioners can approach Italian courts with greater confidence when seeking recognition of judgments from common law jurisdictions that include punitive or multiple damages components based on clear statutory provisions.