ITALY Trends and Developments Contributed by: Luciano Castelli, Elisa Rizzi and Ludovica Accolla, LCA Studio Legale
vency (Legislative Decree No 14/2019). Article 256 (5) expressly extends the possibility of bankruptcy pro - ceedings also to hidden società di fatto (de facto com - panies), not only where the initial insolvency concerns an individual entrepreneur but also when it involves a corporation. There are also cases in which the courts have express - ly referred to the concept of abuse of legal personality. In this regard, as recognised by the Italian Supreme Court, the establishment of multiple companies to carry out what is, in substance, a single business enterprise may constitute an abuse where the corpo - rate form is used to undermine the genuine autonomy of the entities involved, resulting in unified manage - ment, control and asset integration across the group. As for remedies to address such misuse of the cor - porate veil, case law has confirmed the possibility of proceeding to the actual “disapplication of the cor - porate veil”, thereby sanctioning abusive conduct by extending liability for corporate obligations. Taken together, these developments therefore high - light an important feature of Italian law: although it does not formally adopt the doctrine of “piercing the corporate veil” as a general principle, it recognises that legal personality may be subject to abuse and provides for remedies designed to address such abuse. Public policy and the recognition of veil-piercing decisions The central issue in recognition proceedings remains the public policy exception. Italian public policy does not coincide with the entirety of mandatory domestic law; rather, it consists of the fundamental principles and values that define the legal order. Over the last two decades, the Italian Supreme Court has consistently adopted a restrictive interpreta - tion of the public policy exception. According to this approach, recognition cannot be denied simply because the foreign legal rule differs from Italian law; nor can recognition be refused because the foreign court adopted a solution that an Italian court might not have reached.
The decisive question is whether recognition of the foreign judgment would produce effects that are manifestly incompatible with the fundamental values of the Italian legal system . This distinction is crucial. A foreign veil-piercing judgment undoubtedly reflects a legal doctrine that differs from the traditional Italian approach to corporate liability. However, difference does not equate to incompatibility. Italian law itself recognises mechanisms aimed at preventing abuse of legal personality. It also places considerable emphasis on good faith, protection of creditors, prohibition of fraud and responsibility for abusive conduct. Consequently, a foreign judgment extending liability beyond the corporate debtor is unlikely, in itself, to violate Italian public policy merely because it applies a veil-piercing doctrine. The more difficult question concerns the factual and legal basis upon which liability has been extended. Where the foreign judgment is based on findings such as fraudulent asset transfers, commingling of assets, misuse of corporate structures or intentional creditor prejudice, the case for recognition appears particu - larly strong. In contrast, greater scrutiny may arise if the foreign judgment extends liability on grounds that are perceived as excessively broad, unpredict - able or disconnected from any form of abuse. Even in such circumstances, however, the public policy test remains exceptionally demanding and should not be transformed into a disguised review of the merits. Another point to consider is the structural impact of extending liability beyond the formal parties to the proceedings. In “veil-piercing” scenarios, where responsibility is imposed on individuals or entities that were not original parties to the dispute or became involved only at a late stage of enforcement, there is a significantly heightened risk of undermining the essential guarantees of adversarial proceedings and defence rights. This factor may be relevant, as respect for the rights of defence is one of the conditions set out in Article 63 of Law No 218/1995 for the recogni - tion of foreign judgments.
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