International Recent Developments: Italy

Valentina Corona | International Recent Developments

Decided six years ago, the Corte Costituzionale della Repubblica Italiana’s (Constitutional Court) decision of May 26, 2005, is one of the most important decisions in the last twenty years in Italy, because it brought very important changes to the Italian legal system regarding national regulation of a carrier’s liability. As a background matter, Italy enacted the International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading in the Codice della navigazione (Italian Navigation Code), which was promulgated in 1942, but did not enact the subsequent Visby Amendments (Hague-Visby Rules). The result is that Italian national law does not recognize those subsequent amendments, including provisions under article 4, rule 5(e), which exclude the carrier’s right of limitation where damage resulted from its intentional or reckless conduct; article 4, rule 5(a), which introduces the limitation per kilo; or article 4, rule 5(c), which pertains to containers. Another issue is the amount of a carrier’s liability per package or unit, which was set in 1942 and has not been changed since 1954. The result is that article 423 of the Italian Navigation Code provides only a limit per package or unit, which because of monetary depreciation is now roughly a mere $148 per package or unit. This problem is particularly severe in maritime carriage cases involving passengers with vehicles, which are considered as “goods” and not a “package.” Because passengers are not professional shippers, they are usually unaware of a carrier’s limitation of liability, so often, no declaration of a higher value is made. Thus, a carrier may discharge vehicles at their destinations that have been totally destroyed and be held liable for less than $150 for a damaged car (even for the most expensive cars on the market).

It is clear that during the last fifty years, many courts have tried to overcome this inequity by asserting something that the law does not–namely, that the carrier loses its right of limitation when the damage to the carried goods resulted from an intentional or reckless act or omission. By ignoring the package limitations under those circumstances, courts could determine a fair compensation for the damaged goods; however, the Italian Navigation Code does not contain a comparable provision to article 4, rule 5(e) of the Hague-Visby Rules. The Constitutional Court, however, has not decided whether such fair compensation practices are lawful. The Constitutional Court first addressed the inadequate amount on package limitations under article 423 in 1987, but dismissed the question of constitutional legitimacy because the cargo owner had the option to declare a higher value, so the limited amount of liability did not implicate constitutional principles. The Constitutional Court thereby affirmed that a carrier may increase the freight when cargo owners declare a higher value. This decision has been closely contested by lower courts. During the following ten years, the same question was raised twice before the Constitutional Court by litigants claiming that differences between Italian national law and the Hague-Visby Rules created inequality among cargo owners. In both cases, (the first not decided until 1991 and the second not until 2003) the Court dismissed the claims, holding that the Italian Navigation Code may provide a different regulation from international laws. The Corte di Cassazione (Court of Cassation), on the other hand, recognized a breach of the constitutional principle of inequality when the same issue was presented, citing the national law on carriage by air, which provides that the right to limit liability will be revoked if the damage results from an act or omission by the carrier done with intent to cause damage, or recklessly and with knowledge that damage would likely result. After this decision, the Constitutional Court recognized that article 423 must be read as if it provided an exclusion of the limitation when the carrier’s (or its servants’ or agents’) intent is to cause damage, or when the carrier acts with gross negligence. It is clear that there is a significant difference between “gross negligence” and the mental element defined as “recklessly and with knowledge that damage would probably result.” Gross negligence is easier to prove because many acts and omissions can be characterized as gross negligence of the carrier (or its servants or agents). In other words, there is still a significant difference between the Italian Navigation Code and the Hague-Visby Rules, and the main problem for Italian national law remains the amount of limitation, which can only be increased by a legislative measure.