• LATEST NEWS & INSIGHTS 15 March 2024

    Posted on: 15/03/2024


     

     

    WHO IS LIABLE IF THE EVENT STIPULATED AS A CONDITION DOES NOT OCCUR?

     

    Very often, preliminary contracts of sale and purchase are subject to a condition precedent: that is, the obligation to conclude the final contract will arise only if a certain event, stipulated in that specific clause, occurs. The event deduced as a condition may depend on a third party, or on only one of the parties (the so-called potestative condition) or on one of the parties and a third party together (the so-called mixed potestative condition).

     

    The latter case is the most complex because the fulfilment or non-fulfilment of the condition (and consequently the arising of the obligation to enter into the final contract) can be attributed to one of the parties to the contract, or to a third party, or even to both of them to varying degrees. This is the case examined by a very recent decision of the Supreme Court (Cass. 6.03.2024 No. 5976) in which:

     

    – the parties had made the preliminary contract for the sale and purchase of land subject to the condition that a change of urban destination of the area be ordered, and

    – the selling promisor company had instructed the purchasing promissory company to carry out the necessary activities to obtain such a change of urban destination.

     

    The change of urban destination was then not obtained, resulting in the litigation.

     

    In such cases, reference is generally made to Article 1359 of the Civil Code, under which “the condition shall be deemed to have been fulfilled if it has failed for reasons attributable to the party who had an interest contrary to its fulfilment.” That is, if one party has an interest that the event envisaged as a condition does not occur and causes that event not to occur, then the other party is protected, because that event is (fictitiously) deemed to have occurred anyway.

    Article 1358 of the Civil Code, under which the parties, in the pendency of the condition, must behave in good faith, also finds application in this regard.

     

    In the case at hand, the Turin Court of Appeals had held that:

     

    – the promissory purchaser company was the one interested in the non-fulfilment of the condition (pursuant to Article 1359 of the Civil Code);

     

    – the promissory purchaser company had the burden of proving that it was not responsible for the failure to obtain the change of urban destination (according to the ordinary distribution of the burden of proof in the contractual sphere and precisely, in the case in point, of a mandate contract);

     

    – the promissory purchaser company had failed to prove that the failure to obtain the administrative measure depended on a cause not attributable to it and, consequently, the condition had to be considered fictitiously fulfilled (again pursuant to Article 1359 of the Civil Code).

     

    The Supreme Court confirmed the framing of the case as a “mixed potestative condition” but then reversed the reasoning of the lower court. And established two relevant principles of law in the case of failure to obtain a measure from the public administration (when this event is provided for as a condition precedent).

     

    First, Article 1359 of the Civil Code “is inapplicable where the party conditionally bound to a given performance also has an interest in the fulfilment of the condition.”

     

    Second, “the omission of an activity insofar can be considered contrary to good faith and constitute a source of liability, as such activity represents the object of a legal obligation and the existence of such an obligation must be excluded for the activity of implementing the potestative element in a mixed condition, with the consequent exclusion of the obligation to consider the condition fulfilled.”

     

    In conclusion, Article 1359 of the Civil Code cannot find automatic application in cases of mixed potestative conditions, but it is necessary to examine concretely – on a case-by-case basis – whether all the elements provided for therein are met, also in light of the duty of good faith provided for in Article 1358 of the Civil Code.

     

     

    a.gangemi@macchi-gangemi.com

     

     

     

     

    CONSUMER CODE AND DEFECTIVE PRODUCT DAMAGE: IF THE PLAINTIFF IS A CORPORATION WHAT RULES APPLY?

     

    The Court of Appeal of Milan, in a very recent ruling on the subject of product liability, reiterated the principle according to which the Consumer Code does not apply if the person invoking consumer protection has suffered the damage in the exercise of an economic activity.

     

    In Judgment No. 576 published on February the 27th 2024, the Fourth Civil Section of the Court of Appeal of Milan ruled on the operational limits of the Consumer Code (regarding the burden of proof, specifically) when the injured party acts to obtain compensation for a damage while carrying out a commercial and/or entrepreneurial activity.

     

    The gravamen judge, called upon to decide on the liability of a well-known Manufacturer of industrial vehicles for a fire that occurred on a brand tractor, took the opportunity to clarify the boundary between cases governed by consumer discipline (Consumer Code) and those subject to the general discipline of the Civil Code, taking as a necessary reference not only the type of damage sought in compensation but also the quality of the injured party.

     

    In the case at hand, the thermal event had completely destroyed the vehicle owned by a trucking company also damaging the property where the vehicle had been parked.

     

    The Court of Appeals, adhering to previous rulings of the Supreme Court (e.g., Cass. Civ. 19414/2013), held that it had to exclude the applicability of the Consumer Code given that the damage caused by the alleged defective product had affected an asset used in the exercise of an economic activity (trucking, precisely).

     

    Indeed, the recitals of Directive 85/374/EEC, when stating that all application references are restricted to the figure of “consumer”, are set to clarify that the regulations of the Consumer Code strictly apply only to consumers.

     

    Moreover, the definition of compensable damage, as reproduced in almost identical terms in all consumer texts, refers to tragic events such as “… death …” or “… personal injury …” or to injuries such as the “… destruction of a thing other than the product provided that … normally intended for private use and consumption … and … for one’s own private use or consumption …” (see Art. 9 Directive cited above – Art. 123 Consumer Code), all of which are hypotheses that only a consumer/individual can complain about, certainly not individuals who interact in so-called “B2B” relationships.

     

    Still on the subject of compensable damage, the jurisprudence of legitimacy had however long clarified that Presidential Decree 224/88, and therefore the Consumer Code, does not consider the so-called “commercial damage” produced on the part of the economic operator in the exercise of his business, but grants protection only for damage caused to the person or goods belonging to the consumer (see Cass. Civ. Sec. III, 07.05.2013, no. 9254 in Danno e Resp., 2015, 11, 1005).

     

    On this point, the doctrine had also expressed itself by pointing out that “… The special legislation on defective product damage … is arranged for the compensation of the damage caused by the product to the physical integrity or other assets of the user and is not instead arranged, even if the defective product has damaged other assets of the purchaser, for the compensation of losses of a “commercial” nature … because in this case the buyer has been affected not already in his quality of user or consumer, but in the exercise of his economic activity and in the profits of such activity …” (see CARNEVALI, In the product bought and sold and the special legislation on product liability for defective products, and the boundaries of it, comments to a Cass. Civ. 07.05.2015, n. 9254, in Resp. Civ. e Prev., 2015, 5 page 1567).

     

    In short, as clarified by the Court of Appeal of Milan, the applicability of the legislation on product liability finds its limitation in the party asserting the right to compensation. Such remarks have been shared by the cited doctrine for more than a decade, which has excluded the applicability of the Consumer Code, and consumer provisions in general, in relationships between non-consumers or between companies, economic operators and professionals (see CARNEVALI, Product Liability for Defective Products, Commentary on the Consumer Code, in Commentary on the Civil Code, Dei fatti illeciti, 2013, sub Art. 114, 573).

     

     

    e.storari@macchi-gangemi.com

     

     

     

     

    DATA PROTECTION AUTHORITY’S RECORD SANCTION AGAINST ENEL ENERGIA FOR SERIOUS DEFICIENCIES IN PERSONAL DATA PROCESSING.

     

    By Order dated February 8, 2024, the Italian Data Protection Authority imposed a sanction against Enel Energia amounting to 79 million euros for serious deficiencies in personal data processing, making it the highest sanction ever imposed.

     

    The Italian Data Protection Authority has sanctioned Enel Energia S.p.A. for serious deficiencies in personal data processing with an administrative fine of 79,107,101 euros, or 8 percent of the maximum fine, which is significantly higher than the average.

     

    The Measure follows an inquiry initiated by the Authority following an investigation relating to telephone marketing activities carried out by four Italian companies that, without any cooperation contract or authorization from Enel, promoted electricity and gas services through forged forms and identification cards. These companies contacted potential customers through the use of illicitly purchased telephone directories and in violation of Data Protection and Telemarketing regulations, and uploaded contracts concluded on behalf of Enel into its information systems without, however, having authorizations and autonomous access credentials.

     

    As a result of this investigation, the Authority had already sanctioned the four companies with fines of 1.8 million euros and the confiscation of the databases used for the illicit marketing activities established.

     

    This illicit telemarketing activity resulted in the conclusion of 978 electricity and gas supply contracts in favor of Enel by the four companies and, further, “according to the examination of the material confiscated in execution of Order No. 184/2023, they would have introduced about 9300 contracts into the systems of Enel, from 2015 to 2022 ” despite the fact that the companies themselves did not belong to the sales network of the energy company in question (in this sense we speak of “telemarketing undergrowth”).

     

    As a result, the Authority’s investigative activity resulted in a finding that Enel was responsible for the following violations: i) Violation of the principles of accountability and privacy by design, because Enel did not adequately control the agencies that illicitly procured contracts for the company; ii) Lack of proper risk assessment related to the use of the “N.Eve” platform made available to agencies authorized to carry out Telemarketing activities in order to introduce the contracts concluded into the company’s information system. Specifically, Enel did not have controls in place to prevent the credentials to access the information systems from being used on several devices at the same time; iii) Violation of Article 28 GDPR because Enel, the data controller, did not carry out the necessary controls on the agencies that carry out telemarketing activities (data processors/sub data processor).

     

    For these reasons, in addition to the fine, the Authority ordered Enel to communicate the outcome of the proceedings to the individuals whose data was unlawfully acquired and entered into Enel’s computer systems, and to prove, with adequate documentation, the implementation of security measures relating to the access credentials of the N.Eve platform, and measures to ensure the traceability and monitoring of the operations carried out on the platform itself. In addition, the Data Protection Authority enjoined the company in question to provide that telemarketing agencies authorized for this activity, enter into appropriate contracts with any sub-agencies, clearly explaining the distribution of responsibilities for the processing of personal data under Article 28 GDPR.

     

    With reference to the amount of the penalty, as already stated, the Authority issued the highest penalty ever, taking into consideration: (i) the severity of the violations, considering the object and purpose of the processing in the context of a telemarketing activity, as well as the number of subjects involved and the duration of the unlawful conduct (from 2015 to 2022); (ii) the negligent nature of the violations, as an aggravating factor; and (iii) the additional aggravating factor of the high degree of responsibility of the data controller who adopted ineffective technical and organizational measures that were not suitable to protect its customers’ data.

     

    This is certainly a harsh measure, perhaps the result of the soured relationship with Enel, but a reminder to all owners that proper control of their supply chain is absolutely necessary.

     

     

    f.montanari@macchi-gangemi.com
    l.caprio@macchi-gangemi.com

     

     

     

     

    ITALIAN MINISTERIAL CLARIFICATIONS ON THE NEW EXEMPTION REGIME APPLICABLE TO PROFITS PAID TO QUALIFIED INVESTMENT FUNDS ESTABLISHED IN THE EU AND EEA.

     

    In the question time of the Finance Commission, the Italian Ministry of Economy and Finance with answer no. 5-02060 of February 27, 2024 has clarified that the new exemption regime applicable to dividends paid to UCITS, and alternative investment funds established in the European Union (EU) or in the European Economic Area (EEA), with a supervised manager, is applicable to profits paid starting from January 1, 2021.

     

    The domestic rules on the withholding tax applicable to dividends paid by Italian companies and distributed to non-Italian investment funds are governed by Article 27(3) of Presidential Decree no. 600 of 1973, which generally provides for the application of a 26% withholding tax (or a substitute tax in the case of shares or other similar financial instruments placed in central securities depository; in this respect, please refer to the exception under Article 27-ter of the same Decree).

     

    The above-mentioned regime was “recently” amended by Article 1, paragraphs 631-633 of Law no. 178 of December 30, 2020 (Budget Law 2021), extending the exemption regime provided for dividends paid to Italian investment funds also to EU and EEA UCITS and alternative investment funds with a supervised manager.

     

    In this regulatory scenario, lacking precise official clarifications of the Italian tax authorities, there has been uncertainty (up to date) among professional operators as to the temporal element to be taken into consideration for the application of the new (and more favourable) provisions (such as e.g. the period of formation of profits, the date of establishment of the funds, etc.).

     

    Good news: according to the Italian Ministry of Economy and Finance, the new exemption regime for dividends paid by Italian companies to EU and EEA qualified UCITS and alternative investment funds, with a supervised manager, is applicable to profits paid as from January 1, 2021, in line with the provisions set forth by paragraph 632 of Article 1 of the Budget Law 2021.

     

    Therefore, pay attention!: the new exemption regime introduced by the Budget Law 2021 does not take into account neither the period of formation (accrual) of profits nor the date of the relevant distribution resolution. Also the date of the fund’s establishment is not relevant.

     

     

    a.salvatore@macchi-gangemi.com
    f.dicesare@macchi-gangemi.com
    d.michalopoulos@macchi-gangemi.com

     

     

    DISCLAIMER: This newsletter merely provides general information and does not constitute legal advice of any kind from Macchi di Cellere Gangemi. The newsletter does not replace individual legal consultation. Macchi di Cellere Gangemi assumes no liability whatsoever for the content and correctness of the newsletter.

     

     

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