I COMMERCIAL OVERVIEW OF THE SHIPPING INDUSTRY
Italy's fleet comprises more than 1,406 units totalling approximately 15.5 million gross tonnage (GT). About 92 per cent of the fleet is listed in the International Registry (see Section VI.iii), and about 8 per cent is listed in the ordinary Registry. A small quantity of vessels fly the flag of a foreign country under bareboat charter registration. Italy has the world-leading roll-on, roll-off fleet, with 260 vessels with a total GT of about 5 million.
As a result of the market crisis that has affected some shipping segments (especially dry bulk), many Italian shipowners have faced financial difficulties, forcing them to agree debt restructuring plans with creditors – under which the shipping companies were often forced by lending banks to sell their assets – or in some cases to commence liquidation and insolvency proceedings. Private equity funds (such as Pillarstone) have recently taken over the distressed credits from various lending banks. In some cases, these operations have led to the acquisition by private equity funds of the control of Italian shipping companies so that rather than selling the companies or the single assets, the funds have taken control of the business.
The Italian shipbuilding industry has a long tradition and an established reputation; however, fierce competition, especially from Asian shipyards, has caused a significant restriction of the activity of Italian shipyards. The main focus is currently on high-quality niche markets, such as cruise vessels and mega-yachts.
With 55 orders for new ships (totalling approximately 4.4 million GT) in 2018, Italy is ranked fourth in the world shipbuilding ranking and first in Europe. The main market is that of cruise vessels with 44 orders for 3.3 million GT in 2018. Fincantieri, the largest shipbuilding company, controlled by the Italian state, presently accounts for 80 per cent of Italian shipbuilding production and is a leading shipyard for cruise vessels (for example, it has built several vessels for the Carnival group).
II GENERAL OVERVIEW OF THE LEGISLATIVE FRAMEWORK
The legislative framework for shipping in Italy is set out in domestic and international legislation. As far as domestic legislation is concerned, the Italian Code of Navigation is the main set of rules and regulates both maritime and air navigation. The maritime and inland navigation section regulates the administrative organisation of the navigation, ownership and operation of a vessel, charter parties, bills of lading, salvage, collision, maritime insurance and procedural rules for maritime claims.
In addition to the Code of Navigation, a number of complementary laws provide specific rules for particular areas of shipping, such as Law No. 135/1977 on the Role of Shipping Agents, Law No. 84/1994, as amended in 2016, on Port Organisation and Services and Legislative Decree No. 171/2015, as amended in 2018, on Recreational Craft.
International conventions and EU legislation provide an important contribution to the shipping framework in Italy, completing and derogating (if necessary) domestic legislation. These conventions and EU legislation usually prevail over domestic legislation.
Law applicable to contractual and non-contractual obligations is regulated, respectively, by Regulation (EC) No. 593/2008 (Rome I) and Regulation (EC) No. 864/2007 (Rome II), while matters relating to jurisdiction and the recognition and enforcement of judgments in civil and commercial matters are governed by Regulation (EU) No. 1215/2012 (Brussels I bis), which replaced Council Regulation (EC) No. 44/2001 (Brussels I) in 2015.
A number of conventions have been ratified and enforced by Italy, including the International Convention for the Unification of Certain Rules of Law relating to Bills of Lading 1924 (the Hague Rules), the International Convention Relating to the Arrest of Sea-Going Ships 1952 (the Brussels Convention), the International Convention on Salvage 1989 (the 1989 Salvage Convention) and the Maritime Labour Convention 2006 (MLC).
The most prominent convention not yet ratified by Italy is the Convention on Limitation of Liability for Maritime Claims 1976 (the LLMC Convention 1976), the provisions of which have, however, been partially included in domestic legislation (see Section IV.iv).
III FORUM AND JURISDICTION
There are no specific courts in which shipping disputes are litigated, but courts of the main maritime districts have divisions that deal mainly with this type of claim and have a wide experience in maritime matters.
Choice-of-forum clauses will be considered valid by the Italian courts if they comply with provisions set out in Article 25 of Brussels I bis. In particular, Article 25 provides that the prorogation of jurisdiction is valid if it is agreed:
in a form which accords with a usage of which the parties are or ought to have been aware and which in such trade or commerce is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade or commerce concerned.
In accordance with Article 25, choice-of-forum clauses included in a bill of lading are usually considered valid and binding by Italian courts. The Court of Cassation also affirmed the validity of a jurisdiction clause included in a multimodal transport document.
Furthermore, the parties can agree the jurisdiction of an EU Member State even if none of them is domiciled in a Member State, and a jurisdiction clause is to be considered an agreement independent of the other terms of the contract and its validity cannot be contested solely on the ground that the contract is not valid.
In the event that proceedings are commenced before an Italian court without jurisdiction, the defendants must challenge this in their first pleadings under penalty of inadmissibility.
Choice-of-law issues are regulated by the Rome I Regulation. According to Rome I, the choice of law made by the parties requires no formalities and can be inferred by the judge taking into consideration the parties' intentions and behaviour.
Limitation periods depend on the nature of the claim. According to Article 2951 of the Italian Civil Code, a one-year time limit applies to claims arising under a contract of domestic rail or road carriage. The same one-year limit applies to cargo claims in international contracts under the Hague Rules. If, however, a claim arises under a contract of domestic sea carriage, the time bar will be six months in the event that the carriage is within Europe or a Mediterranean country; otherwise, the time limit is one year.2 Other limitation periods in shipping are one year for charter parties (six months or one year for voyage charter or contracts of carriage), two years for collision damages and salvage remuneration, and three years for oil pollution damages. The general rule for liability in tort provides a five-year time limit.
Time limits cannot be extended or shortened by agreement between the parties, but domestic law time limits may be interrupted, so that a new limitation period commences by a claimant serving a writ of notice of claim with a request of payment.
ii Arbitration and ADR
Arbitration is not the main method of dispute resolution in Italy and therefore there are no specific associations dealing with maritime arbitration such as there are in other maritime countries. Most arbitration clauses included in contracts, even with Italian parties, refer to arbitration in London.
Nonetheless, arbitration in Italy can be instituted according to Article 840 et seq. of the Italian Code of Civil Procedure and it can be formal or informal. The main difference between the two procedures is that in formal arbitration, the arbitrators serve as substitutes for the ordinary courts and their award is enforceable as a judgment, while in informal arbitration, the arbitrators are deemed to be acting as agents to whom the parties have delegated the function of settling the dispute by means of a document (the award) that is in the nature of a settlement agreement rather than a judicial decision. An award in informal arbitration cannot therefore be directly enforced but must be 'sued on' like a contract and is carried into effect through enforcement of the judgment rendered upon it.
As far as arbitration clauses are concerned, courts in Italy are very strict on ascertaining their validity, and they must be signed by the parties. An arbitration clause included in a contract that has not been specifically signed is likely to be considered void.
From September 2013, compulsory mediation was introduced in Italy for certain types of claims. As far as shipping is concerned, mediation is compulsory for insurance claims and therefore must be carried out before any proceedings against insurers are brought to court.
iii Enforcement of foreign judgments and arbitral awards
The rules on the recognition and enforcement of judgments rendered in other EU Member States are set out by Brussels I bis. Under the EU Regulation, a judgment rendered in a Member State that is enforceable in that Member State is also enforceable in the other Member States without any declaration of enforceability being required. Proceedings may be instituted only in cases where the grounds for enforcement are disputed. The person against whom the enforcement is sought can in fact make an application for refusal of enforcement to the competent authority (i.e., the tribunal of the place where the enforcement is sought).
For all other countries, international and bilateral conventions may exist.
As far as international conventions are concerned, judgments rendered in, for example, Switzerland, Norway, Denmark and Iceland will be recognised and enforced in accordance with the Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (the Lugano Convention 2007) (succeeding the Lugano Convention 1988), which is, in fact, very similar to EU legislation.
If Brussels I bis or international conventions do not apply, specific bilateral conventions exist between Italy and certain countries (such as Tunisia since 1967) or, as a residual criterion, the Italian courts will apply Articles 64 to 71 of Italian Law No. 218/1995, which provides a test regarding only the regulatory proceedings followed in rendering the judgment without any reconsideration of the merits.
Regarding the enforcement of foreign arbitral awards, Italy is a signatory party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (the New York Convention). Pursuant to that Convention, the Italian courts will consider arbitral awards rendered in another contracting state as directly binding in Italy. Enforcement will be provided by means of an exequatur procedure that involves a petition to be filed with the competent court of appeal, the decision whether to grant or reject the enforcement of the award can be challenged by any interested party within 30 days.
As regards awards rendered in non-contracting states of the New York Convention, the Italian courts will apply Articles 839 to 840 of the Code of Civil Procedure; the test for the recognition and procedure for enforcement are very similar to those described above.
IV SHIPPING CONTRACTS
A shipbuilding contract is considered to be a contract for the supply of workmanship and materials. Article 241 of the Code of Navigation in fact refers to the provisions of the Civil Code regarding 'appalto' (which corresponds to 'supply of workmanship and materials'). In any case, parties are free to select the law to govern their contract3 and usually each contract includes an express clause to that effect.
With reference to transfer of title to the vessel, this is another aspect that is usually dealt with from contract to contract. Parties can agree that ownership will be transferred upon delivery; in this case pre-delivery instalments are secured by refund guarantees or by a mortgage on the ship under construction. However, it is also possible to agree that ownership will be transferred 'step by step', concurrently with payment of pre-delivery instalments.
Another aspect that must be underlined is that under Italian law there is a separate Registry of Ships under Construction.4 The shipbuilding contract and a declaration that construction has started must be registered. The registration is made in the name of the builder or the buyer, depending on who holds title in construction.
As to the remedies for defects, the parties can incorporate into the contract clauses providing for liquidated damages in the event of breaches of guaranteed standards of performance; for example, regarding speed or consumption5 and for the right of termination in the event of particularly serious breaches.6
The signature of the protocol of delivery and acceptance will be final and binding except for continuing performance warranties, defects that were fraudulently concealed and latent defects (i.e., defects that could not be detected by reasonable diligence).7
ii Contracts of carriage
After entering into force in 7 April 1939, the Hague Rules were renounced in 1984 and, in August 1985, Italy ratified the Protocol to amend the International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading 1968 (the Hague-Visby Rules), which entered into force in November 1985, as amended by the Protocols of 1968 and 1979. The Hague-Visby Rules are to be considered a special Italian law, overruling the general Code of Navigation. Whenever the Hague-Visby Rules do not apply, the Italian courts make reference to the law stated in the bill of lading to be applicable or, in the absence of a choice of law, to the law of the country in which the carrier has its principal place of business. In the absence of sufficient evidence of a foreign law, the Italian courts would apply the Code of Navigation.
The Code of Navigation – which also applies to any carriage performed by Italian vessels between Italian ports (cabotage) – is inspired by the Hague Rules, and its provisions on carriers' liability do not differ substantially from the Convention, except in respect of the amount of the package limitation.
Article 423 of the Code of Navigation provides that 'the compensation due by the carrier cannot exceed, for each unit of cargo, the amount of €103.29 or any higher amount equal to the value declared by the shipper before loading'; the package limitation under the Hague-Visby Rules is certainly higher than the limitation figure under the Code of Navigation. However, after Judgment No. 199/2005 of the Constitutional Court, the limit of Article 423 of the Code of Navigation cannot be applied in a case of wilful misconduct or gross negligence of the carrier and in practice the limit is frequently overruled by Italian courts.
iii Cargo claims
Only the person who has title can sue for loss or damage to the cargo. The title holder is the legitimate holder of the original bill of lading according to the rules of transfer of the bill of lading itself. Once the bill of lading has been surrendered to the carrier against delivery of the goods, the cargo owner can also sue. Therefore, the shipper cannot sue unless it has retained possession of the original bill of lading or has become the assignee of the rights of the cargo owner. Insurers may bring a suit in their own name, but must be properly subrogated in the rights of their assured.
By Judgment No. 12565/2018, the United Sections of the Italian Court of Cassation addressed the issue of insurance compensation and compensation for damages, and held that:
- compensation for damages and insurance compensation aim at the same compensatory function and, therefore, cannot be accumulated for the benefit of the damaged party;
- payment of the insurance indemnity automatically determines a corresponding reduction of the claim for compensation against the damaging party; and
- the subrogation of the insurer against the third party responsible for the damage takes place automatically with the payment of the indemnity and does not require any prior communication from the insurer regarding its intention to enforce the rights of the insured against any third party.
A suit may be brought against the carrier. Unlike in common law jurisdictions, Italian law does not allow a suit to be brought against the ship, as defendant, by an action in rem.
Under Italian law, the ship's agent can be sued as the representative of the carrier,8 provided the carrier was its principal. The identity of the agent's principal can be gathered from the notice that the agent must file with the harbour master in connection with the arrival of a foreign ship in port. If the ship's agent was not appointed by the carrier, the claimant will have no alternative but to sue the carrier direct by serving a writ of summons at the carrier's registered office.
A jurisdiction clause contained in a bill of lading will be recognised by the Italian courts provided it complies with the provisions of Brussels I bis (Article 25) or of the Italian International Private Law9 (Article 4).
An arbitration clause contained in a charter party will be recognised by the courts on condition that the charter party is signed and its terms and conditions, including express mention of the arbitration clause, are incorporated into the bill of lading. The incorporation of an unsigned arbitration agreement into a contract will not be recognised. If a bill of lading refers to the terms of a charter party without identifying it, incorporation will not be recognised.
iv Limitation of liability
According to Article 7 of the Code of Navigation, shipowners' liability is ruled by the law of the ship's flag state. Therefore, the tonnage limitation regime in respect of claims against the vessel to be applied by the Italian courts depends on the national law or international conventions ratified by the country of the ship's flag.
Italy has not ratified the LLMC Convention 1976 but, by means of Legislative Decree No. 111/2012, the Italian government has enacted in Italy the provisions of EU Directive 2009/20/EC on the insurance of shipowners for maritime claims. This Decree also introduces into Italian law a new regime of limitation of liability for shipowners. Articles 7 and 8 of the Decree have, in fact, introduced the same limits of liability as those provided under Chapter II of the LLMC Convention as amended by the LLMC Protocol 1996 for vessels of 300 GT or more. The Decree gives rise to a number of problems, including:
- the absence of a list of credits that are subject to limitation and those excepted from limitation; and
- the absence of any provisions regarding the cases in which a shipowner may lose title to limit.
In addition to the above, the Decree does not contain any provisions regarding the procedural rules applicable to limitation proceedings. The procedural rules contained in the Code of Navigation (adopted but having in mind the old regime provided under the Code of Navigation, which remains valid for vessels of 300 GT or less) should, in our view, remain in force. A similar solution was adopted in a decision of the Court of Nola in 2017.
For vessels of 300 GT or less, the regime of the Code of Navigation remains applicable.10 Such regime is based on the value of the vessel rather than the tonnage. A recent decision of the Court of Appeal of Palermo in 2019 has confirmed the principle that the value of the vessel for the purpose of limitation corresponds to the insured value. The same decision has also confirmed that it is lawful that two different regimes of limitation presently exist in Italy and that it is reasonable and consistent with the Constitution that (according to the regime of the Code of Navigation) the right to limitation is lost in cases of gross negligence or wilful misconduct of the owner only (and not also of his or her servants or agents).
i Ship arrest
Italy has ratified the Brussels Convention under which a vessel registered in a contracting state can be arrested only for maritime claims as defined and listed in Article 1 of the Convention. Ships flying the flag of non-contracting states can be arrested in Italy for any claim.
Procedural rules for arrest are set out in domestic legislation by Articles 682 to 686 of the Code of Navigation and Article 669 bis et seq. of the Code of Civil Procedure.
To obtain the arrest of a ship, the claimant must file a petition for arrest in the competent court, providing prima facie evidence of its claim (fumus boni iuris). Following the petition, the court sets up a hearing for a discussion of the arrest with both the claimant and the defendant to decide whether to grant the arrest. If the arrest is urgently needed and waiting to summon the defendant would jeopardise the claimant's rights, the court can order the immediate arrest of the ship and then set the hearing to decide whether to confirm, amend or revoke the arrest.
The court may also, at its discretion, order the applicant to provide counter-security in favour of the owner to cover damages in the event that the arrest is found to be wrongful. A claim in Italy will be declared wrongful if it is found to be groundless and brought by the claimant without due care.
Pursuant to Article 669 ter of the Code of Civil Procedure, it is possible to appeal an arrest order issued by a court.
Once a ship has been arrested, the court fixes a deadline (not exceeding 30 days) for the claimant to start proceedings on the merits before the competent court, which is not necessarily an Italian court. If the claimant fails to do so, the arrest ceases to be effective.
Apart from in exceptional cases, sister and associated ships can only be arrested in Italy if they are owned by the same debtor.
The issue of arrests in connection with claims for bunker supplies became particularly relevant after the collapse of the Danish group OW Bunker, in November 2014, which gave rise to a series of court disputes.
The claim for unpaid bunkers supply falls within the definition of the maritime claim under Article 1(k) of the Brussels Convention ('goods or materials wherever supplied to a ship for her operation or maintenance'); thus, when the debtor is the shipowner itself, the claimant may secure the claim with an arrest of the supplied vessel.
More controversial is the possibility of obtaining an arrest of the vessel if the debtor is a person other than the shipowner, such as the charterer. It is disputed whether Article 3, Paragraph 4 of the Convention may be interpreted as allowing the arrest of the vessel even when the claim is not assisted by a lien on the vessel. The trend of the Italian courts is more favourable to claimants and arrests are usually granted even in the absence of a lien on the vessel. There has, however, been a recent decision in the opposite direction.11
However, according to some recent decisions of the Italian courts, Article 3.4 of the Convention allows the arrest of the supplied vessel only when the debtor (other than the shipowner), such as the charterer, has control over the vessel, but in no other cases. In a recent case of a claim against the bareboat charter of the arrested vessel, on the assumption that the claim was assisted by a lien, the arrest was granted even though the debtor was a bankrupt company and despite the provisions of the bankruptcy law, which prohibits claimants from bringing enforcement and precautionary proceedings after bankruptcy is declared.12
ii Court orders for sale of a vessel
Rules concerning the judicial sale of a vessel can be found in Articles 643 to 686 of the Code of Navigation and Articles 483 to 542 of the Code of Civil Procedure.
The procedure for carrying out a judicial sale of a vessel starts with the court bailiff serving an order to pay the shipowner and a deadline to do so, with the notice that, in the event of non-compliance, the creditor will proceed with the attachment of the debtor's goods. To do so, the creditor must be in possession of an enforceable title, usually a judgment.
If the debtor fails to pay within the deadline, the creditor will be entitled to serve upon the debtor and the master of the vessel, through the bailiff, a writ of attachment, along with the order to pay and the enforceable title. The same writ of attachment must be sent to the harbour master of the port at which the ship is registered so it can be recorded in the register. The procedure can be joined by other creditors, according to Articles 499 and 500 of the Code of Civil Procedure.
Once the vessel is attached, it cannot leave the port without specific permission from the court. If the debtor persists in not paying, a creditor is entitled to apply for the judicial sale of the vessel between 30 and 90 days after the attachment. The application must be served, through the bailiff, upon the debtor and to all other creditors who joined the procedure, who are allowed to make observations on the method of the sale.
The application must be filed within 30 days of its service at the competent court so that an expert can perform a survey to render an estimate of the value of the vessel. After hearing all interested parties, the judge will then order the sale of the vessel. The sale is carried out by means of a public auction. The sale operations can be delegated by the judge to a notary public, a lawyer or an accountant.
The judicial sale of the vessel may be ordered when the vessel is under arrest even before a judgment on the merits is issued if, in the opinion of the judge, there is a danger that the vessel will become lost or deteriorate pending the proceedings on the merits. After the sale, the judicial seizure is transferred from the vessel to the proceeds of the sale.
The International Convention for the Safety of Life at Sea 1974 (SOLAS) was enacted in Italy by Law No. 313/1980. Following its enactment, and taking into consideration its subsequent amendments, the national Regulation on the Safety of Life at Sea was reformed in 1991 by Presidential Decree No. 435/1991.
As far as the safety of work on board ships is concerned, the relevant rules are set out in Legislative Decree No. 271/1999.
Finally, the European Commission, in connection with the MV Erika and MV Prestige disasters in 1999 and 2002, respectively, introduced various measures on maritime safety. These measures pertain, inter alia, to the setting up of a European Maritime Safety Agency, the setting up of a Compensation Fund for Oil Pollution in European Waters, the introduction of a Community monitoring, control and information system for maritime traffic, the speeding up of the replacement of single-hull oil tankers with double-hull oil tankers, and the ban from all European ports of all ships older than 15 years that have been detained more than twice in the previous two years.
ii Port state control
Italy is party to the Paris Memorandum of Understanding on Port State Control 1982 (the Paris MOU), pursuant to which each contracting state must maintain an effective system of port state control with a view to ensuring that foreign merchant ships calling at or anchored off a port of its state comply with certain international standards, as provided in the international conventions listed under Section II. For European countries such as Italy, the provisions of the Paris MOU are reinforced by EU Directive 2009/16/EC on port state control, which substantially endorses the MOU's content.
The port state control officers in Italy (i.e., the parties responsible for port state control) are harbour masters.
In accordance with the Paris MOU, when deficiencies are found that render a ship unsafe to proceed to sea or that pose an unreasonable risk to safety, health or the environment, the ship may be detained. The harbour master will issue a notice of detention to the ship's master also informing the ship's owner or operator that it has the right of appeal. An appeal must be made to the competent regional administrative tribunal within 60 days of notification of the detention. A complaint may also be addressed by the owner, the flag, the class or the International Safety Management manager to the harbour master's headquarters.
iii Registration and classification
Under Article 143 of the Code of Navigation, registration of a ship in the Italian Registry is subject to the following requirements:
- at least half of the shares in the ship are owned by an Italian or a European person or entity; or
- in the case of a newbuild or a ship that was previously registered in a non-European country, the vessel is owned by a non-European person or entity that directly assumes the exercise of the ship through a stable organisation in Italian territory.
Law No. 30/1998 instituted the International Registry in which ships exclusively destined for commercial international trade are listed. Further to that, a special registry (bareboat registry) is dedicated to vessels already listed in a foreign registry and temporarily suspended from that registry when on bareboat charter to an Italian or European subject.
Regarding the registration of a ship under construction, see Section IV.i.
The Italian classification society is RINA, which, as with all other recognised classification societies, is entrusted by the state with technical control over the building of ships in Italian shipyards.13
As regards the liability of classification societies, the sole precedent is the decision rendered by the Genoa Tribunal in 2010 in a case regarding the claim of a charterer against a classification society for damages suffered resulting from the detention of a vessel after a control order under the Paris MOU. The Genoa Tribunal held that the liability of the classification society could be based on the reliance placed by the charterer on the class certificate in deciding to charter the Redwood and upheld the claim.
However, that decision has been overruled by the Court of Appeal of Genoa (though for reasons related to the merits of the cause and not to the legal principle mentioned above), which was confirmed by the Italian Supreme Court of Cassation in March 2018.
iv Environmental regulation
Italy has ratified:
- the International Convention on Civil Liability for Oil Pollution Damage 1969, replaced by 1992 Protocol (the CLC Convention);
- the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage 1992 (the Oil Pollution Fund Convention); and
- the International Convention on Civil Liability for Bunker Oil Pollution Damage 2001 (the Bunker Convention).
In terms of domestic legislation, environmental regulation is contained in the Environmental Code.14 Part 6 of the Environmental Code contains the procedure for the establishment of liability and compensation for damage to the environment. Article 303 provides that Part 6 of the Code does not apply to environmental damage relating to accidents falling within the application of an international convention, including the CLC Convention, the Oil Pollution Fund Convention and the Bunker Convention.
Despite this exclusion, a recent decision of the European Court of Justice in The 'Erika'15 deemed the European Directive on waste (which was enacted in Italy with the Environmental Code) applicable to a spill of hydrocarbons after the sinking of a ship, and therefore invited the national judge to apply the principles of the Directive.
Finally, through Legislative Decree No. 112/2014, Italy has adapted its legislation to comply with European Directive 2012/33/EU on sulphur content of marine fuels, which introduced standards aimed at drastically reducing sulphur emissions from vessels.
v Collisions, salvage and wrecks
The Convention for the Unification of Certain Rules of Law with respect to Collisions between Vessels 1910 (the Collision Convention 1910) is in force. Jurisdiction is founded on the International Convention for the Unification of Certain Rules relating to Civil Jurisdiction in Matters of Collision 1952 (the Collision Convention 1952). Therefore, an Italian court will have jurisdiction if Italy is where:
- the defendant has either his or her habitual residence or a place of business;
- arrest of the defendant ship was effected or of any other ship belonging to the defendant that can be lawfully arrested, or where arrest could have been effected and bail or other security has been furnished; or
- the collision occurred.
The Court of Cassation16 held that the special criteria of jurisdiction of the Collision Convention 1952 prevail over the general discipline of Brussels I. Neither Brussels I nor the new Brussels I bis affects any conventions to which the Member States are party and that govern jurisdiction in relation to particular matters.
A party can claim all damages that are immediate and direct consequences of the collision, including material damages and loss of earnings. Italy has ratified the 1989 Salvage Convention, which therefore applies as a general rule. By Judgment No. 7149 dated 13 March 2020, the Italian Supreme Court clarified a number of issues relating to the 1989 Salvage Convention.
First, the Court confirmed that the Convention applies also to purely domestic salvage cases. Second, the Court stated that the Convention can be supplemented by national legislation on certain issues indicated in the Convention itself, one of which being the joint liability of the owners of the salvaged goods.
Third, the Court considered the long-debated issue of the existence of joint liability of the owners of the salvaged goods. In this respect, the Court restated the law by holding that: (1) the owner of the ship is the 'main debtor' and, therefore, can also be liable for the portion of the salvage award relating to cargo, and (2) cargo owners are liable only for the portion of the salvage award relating to their own goods.
The limitation period for enforcing salvage claims in Italy is two years from the day on which the salvage operations are completed.17
The salvor can arrest the salvaged ship (or a sister ship) under the Brussels Convention. It can also arrest the cargo within 15 days of discharge and before it has been lawfully delivered to a third party.
According to Article 73 of the Code of Navigation, the owner of the vessel has the duty to remove a wreck. Further, a general obligation of remediation or depollution is imposed by the Environmental Code on the party responsible for the pollution of an area. In a case of omission, the remediation or depollution is carried out by the public administration, which can claim the costs from the responsible party.18
Italy has not ratified the Nairobi International Convention on the Removal of Wrecks 2007 (Nairobi WRC 2007), which entered in force in 2015.
Finally, Regulation (EU) No. 1257/2013 provides for a new regime on ship recycling. It introduces the same standards of ship recycling as are imposed by the Hong Kong Convention for the Safe and Environmentally Sound Recycling of Ships 2009 (the Hong Kong Convention) (not yet in force) and establishes a list of recycling facilities authorised to conduct ship recycling operations. The Regulation entered into force in 2013 but is not yet applicable.
vi Passengers' rights
The European Union implemented two important pieces of legislation on passengers' rights: Regulation (EU) No. 1177/2010 concerning the rights of passengers when travelling by sea and inland waterways, and Regulation (EC) No. 392/2009 on the liability of carriers of passengers by sea in the event of accidents, implementing the Athens Convention on the Carriage of Passengers and their Luggage by Sea 1974 (the Athens Convention) as amended by the 2002 Protocol (according to the 2006 International Maritime Organization guidelines for implementation of the Athens Convention). The Italian Code of Navigation also regulates the carriage of people by sea in Articles 396 to 418.
For example, Article 400 of the Code of Navigation provides that if a passenger is unable to start a journey for serious, justified and unpredictable reasons, he or she may terminate the contract of carriage by paying the carrier a penalty of 25 per cent of the ticket price. If, however, for reasons that cannot be attributed to the passenger's fault (such as an illness that forces him or her to disembark) the journey is interrupted, he or she is entitled to a refund of the price from the carrier for the part of the journey that has not been undertaken.
In the event that the carriage forms part of an 'all-inclusive' tourist package, in application of Directive 90/314/EEC, Articles 32 to 51 of the Tourism Code19 provide special provisions to protect passengers' rights on sea carriage, such as liability of the seller and of the provider of the services included in the tourist package in relation to their respective activities.
On 25 November 2015, Directive (EU) 2015/2302 of the European Parliament and of the Council on package travel and linked travel arrangements was issued. The new rules, which were due to be implemented by the Member States in their national legislation by 1 January 2018, increase the existing protection for travellers and, for the first time, set out a regulation on linked travel arrangements.
vii Seafarers' rights
Italy ratified the MLC on 19 November 2013, and it entered into force on 19 November 2014. As of that date, 13 maritime conventions previously ratified by Italy are considered ipso jure denounced.
In accordance with Standard A4.5(2) and (10) of the MLC, the Italian government has specified that it will progressively extend the following branches of social security to seafarers:
- sickness benefit;
- unemployment benefit;
- old-age benefit;
- employment injury benefit;
- family benefit;
- maternity benefit;
- invalidity benefit; and
- survivors' benefit.
In domestic legislation, seafarers' rights are granted by National Labour Collective and a wide number of specific laws, such as Presidential Decree No. 231/2006 on seafarers' placement regulation or Legislative Decree No. 271/1999 on security and health of seafarers on board merchant ships.
As far as stability of employment is concerned, Article 18 of Law No. 18/1970 has always protected employees, providing strict rules on the termination of employment agreements by the employer. This Law became directly applicable to seafarers after Judgment No. 364/1991 of the Italian Constitutional Court. Nonetheless, labour law legislation, including the application of Article 18 of Law No. 18/1970, has been recently modified to give more rights to employers in respect of the termination of employment contracts. The provisions of labour law resulting from the recent reform have been declared applicable to seafarers.20
The covid-19 pandemic has crucially impacted the performance of contractual obligations worldwide, thus raising the question of whether the pandemic itself could exclude contractual liability for non-performance of the contract under applicable law or force majeure clauses.
As far as Italian law is concerned, rather than providing a definition of force majeure, the Italian Civil Code states in general terms the circumstances in which the debtor is exempted from liability for failing to perform its contractual obligations: Article 1218 provides that the debtor is liable for damages arising from his or her failure to perform unless he or she proves that such failure was due to a cause 'not imputable to him'; Article 1256 provides that the debtor is relieved of its obligation when performance becomes totally and irreversibly impossible 'for a cause not imputable' to the debtor; and Article 1463 provides that if the contract entails mutual obligation and one of these becomes impossible (as per Article 1256), the contract is terminated.
The burden of proof is apportioned as follows: the creditor must establish that the debtor failed to perform its contractual obligation; at that stage, it is for the debtor to prove that the non-performance or the delay in performing was due to a cause not imputable to him or her.
The concept of non-imputability is therefore crucial to determine whether the debtor can be exempted from liability for his or her failure to perform. Three elements concur in this concept (i.e., in the definition of force majeure); namely, the circumstances must be (1) 'extraordinary': this element has an objective nature and is based on the appreciation of factors (e.g., frequency, impact, intensity) that can be measured and classified; (2) 'unforeseeable': this element is subjective in nature, but must be assessed by reference to the normal average capacity and diligence of the contracting party to foresee such events; and (3) beyond the debtor's control and not involve the debtor's negligence.
As mentioned, the Civil Code does not provide a definition of force majeure event; also, it does not list specific cases. Orders by public authorities ('factum principis') are not to be considered automatically as force majeure events; they can be force majeure to the extent that they meet the above-mentioned requirements.
Past natural disasters have been qualified by the legislator as force majeure events pursuant to Article 1218 et seq.; for example, in 2012, when an earthquake hit the Italian region of Emilia-Romagna.
Due to the recent events related to the covid-19 outbreak, Article 91 of Decree-Law No. 18/2020 introduced a new provision stating that 'Compliance with the containment measures set out in this decree is always considered for the purposes of excluding, pursuant to and for the purposes of articles 1218 and 1223 of the Italian Civil Code, the liability of the debtor'. In such respect, it must, however, be noted that: (1) according to such provision, force majeure is taken into consideration only in relation to the 'compliance with the containment measures', and not to the epidemic event as a whole; (2) these restrictions do not constitute per se cases of force majeure since they must be 'considered' by the judge; and (3) causation must always be established; the debtor must show how the restriction actually affected his or her operations and ability to perform.
1 Pietro Palandri and Marco Lopez de Gonzalo are partners at Studio Legale Mordiglia.
2 Article 438, Paragraphs 1 and 2 of the Code of Navigation.
3 Article 3 of Regulation (EC) No. 593/2008.
4 Article 234 of the Code of Navigation.
5 Article 1383 of the Civil Code.
6 Article 1456 of the Civil Code.
7 Article 1667 of the Civil Code.
8 Article 288 of the Code of Navigation.
9 Law No. 218/1995.
10 Article 275.
11 Tribunal of Oristano in 2019.
12 Tribunal of Ravenna in 2020.
13 Article 235 of the Code of Navigation.
14 Legislative Decree No. 152/2006.
16 Judgment No. 4686 of 9 March 2015.
17 Article 500 of the Code of Navigation.
18 Article 250 of the Environmental Code.
19 Legislative Decree No. 79/2011.
20 Tribunal of Venice in 2019.