Recently Senior Legal Counsel Giacomo Lorenzo was approached by Dippy Singh of the Commercial Dispute Resolution Journal to provide his and Deminor's perspective for an article. The reinvention of Italian class actions (first published on 09/09/24) can be accessed free of charge (registration required) via the website link above.
Below you will find Giacomo Lorenzo's full answers from this interview:
Q – Are you seeing much appetite for class actions funding in Italy? If so, what types of claimants from Italy are seeking funding for class actions?
GL – Class actions in Italy are underutilized, partly because they are a relatively new mechanism, not yet widely known and still marked by uncertainties. The Italian Ministry of Justice has recorded 34 class action proceedings brought before Italian courts. Most of these class actions have been initiated by consumers for alleged breaches of contract and by workers for alleged violations of labor-related legislation.
Q – What types of class actions have you financed in Italy and/or what types of class action claims are you expecting to see from this jurisdiction in the near future?
GL – Currently, we have funded various group actions by bundling multiple claimants in the same civil ordinary proceedings, but we have not yet funded any class actions.
Regarding the second question, there is growing awareness and activism around environmental issues in Italy and across Europe, and I anticipate that claims related to emissions and pollution standards will increase in the coming years. A recent judgment by the European Court of Human Rights recognized individuals' rights to effective protection by state authorities against the harmful effects of climate change. I believe this could pave the way for climate-related class actions, particularly against public authorities, in the absence of EU legislative intervention. I also expect an increase in claims related to ESG matters.
Q – If you’re not seeing much appetite, why do you think this might be?
GL – As mentioned before, class actions proceedings in Italy are underutilized, partly because they are a relatively new mechanism, not yet widely known and still marked by uncertainties. A key issue is that, until 19 May 2031, Italy will have three different frameworks for collective protection, which could cause confusion for legal practitioners. In light of the above, the number of class actions in Italy remains low. Instead, the traditional method of consolidating multiple claimants in the same proceedings continues to be the preferred approach. I believe that the advent of litigation funding in Italy will lead to an increase in collective actions. However, unless the class action process is simplified, it is likely that most mass claims will still be pursued through traditional proceedings or the assignment model.
Q – How do the Italian courts view litigation funding?
Have there been any rulings that have changed how funding can be secured by claimants in Italy? Any hurdles that funders face from the courts or wider class actions regime in Italy?
GL – The only relevant rulings on litigation funding agreements in Italy are the recent decisions by the Supreme Court. The Court addressed contracts involving the assignment of disputed claims without immediate compensation. According to these decisions, the assignment model adopted by the litigations funders remains valid and enforceable even if the litigation funder lacks the authorization required by Article 106 of the Consolidated Law on Banking (Testo Unico Bancario), provided that no payment is made for the transfer of the claim at the time of assignment and payment for services is contingent upon the recovery of the disputed claim. This was affirmed in four judgments delivered in 2024. Consequently, there is an expectation that litigation funders will increasingly use the assignment model, especially in antitrust damages cases.
Litigation funding is not yet comprehensively regulated in Italy. The only legislation addressing certain aspects of third-party litigation funding is Legislative Decree No. 28 of 2023. This decree introduced some regulations through Article 140-septies of the Italian Consumer Code, as part of the Representative Action Directive's implementation in Italy. Under this provision, the qualified entity must disclose the existence of a funding arrangement to the court and the defendant, though not the actual funding agreement. Additionally, Article 140-septies provides that if the funder is a competitor of the defendant or dependent on them, the collective claim will be deemed inadmissible. In such cases, the judge must set a deadline for the qualified entity to either reject the funding or amend the agreement to eliminate the conflict of interest, or else the collective action will be declared inadmissible.
Catch-up with Giacomo Lorenzo at the Lear Competition Festival (LCF) 2024
The Lear Competition Festival (LCF) festival in Rome is approaching fast with Charles Demoulin and Giacomo Lorenzo leading in attendance for Deminor. As part of Deminor's Gold Partnership with the event, Charles Demoulin will be moderating a panel discussion titled "Funding and Litigating Private Damages Claims: What Have We Learned so Far?" with Malcolm Tiffin-Richards ( METRO AG), Dany Verzeele ( ECS Zeebrugge) and Giacomo Lorenzo.
Click here for more details: https://www.deminor.com/en/news-insights/lear-competition-festival-2024/
Further Reading - The Third Party Litigation Funding Law Review: Italy
The Third Party Litigation Funding Law Review provides an annual overview of the law and practice of third party funding in jurisdictions where it is reasonably well established. With a focus on significant recent cases and developments, it examines the key features of the legal and regulatory regimes governing funding agreements, as well as practical considerations when structuring these agreements.
Now in its seventh edition, members of the Deminor team have authored several of the regional report chapters. Senior Legal Counsel Giacomo Lorenzo has authored the latest Italian chapter review, which you can access by clicking on the image below:
Get in touch with Senior Legal Counsel Giacomo Lorenzo to learn more about how Deminor Litigation Funding can help your Investment Recovery, Antitrust Damages and Commercial Litigation claims within Italy.
