Italian Supreme Court: Crimes Benefiting Foreign Companies Trigger Administrative (Quasi-Criminal) Liability
Multinationals operating in Italy should develop and implement a compliance system in line with the requirements and standards provided for by Decree No. 231/01.
The Italian Supreme Court, in a decision of April 2020, upheld significant prior lower court decisions. It held that foreign companies can be liable for the "administrative" (quasi-criminal) liability governed by Legislative Decree No. 231 of June 8, 2001 ("Decree No. 231/01") for crimes committed in their interest, or for their benefit, in Italy by their senior managers or employees.
Decree No. 231/01 provides that, when a company's senior manager or an employee is sentenced for a crime within its scope, the court can also sanction the entity in whose interest, or for whose benefit, the crime was committed. Potential penalties include monetary fines and certain precautionary prohibitions, e.g., a ban on carrying out a business; ban on entering into agreements with public administrations; the revocation of authorizations, permits, grants, and subsidies, etc. To avoid such liability, the relevant entity must demonstrate that it had adopted adequate internal policies as well as organizational and supervisory procedures to prevent the perpetration of the crime(s) in question, such as the adoption of a proper compliance model, the setting up of a supervisory board, and the compliance by the board with its duties and the violation of the model by the senior manager/employee.
According to the recent Supreme Court decision, foreign entities operating in Italy are subject to this administrative (quasi-criminal) liability under Decree No. 231/01 regardless of their jurisdiction of incorporation and/or location of headquarters or branches. In addition, it is irrelevant whether the applicable law in the company's home jurisdiction requires a similar compliance system.
In light of the Supreme Court's decision, it would be prudent for multinationals operating in Italy (even if they have no subsidiaries or branches in the country) to develop and implement a compliance system in line with the requirements and standards provided for by Decree No. 231/01. They should also stand ready to internally investigate and remediate instances of wrongdoing that might subject the companies to liability under the decree.
Antonio Rodontini, ACR LEX—Studio Legale, assisted in the preparation of this Alert.