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Business Courts are getting bogged down as case backlog and trial times increase

by Valentina Maglione and Bianca Lucia Mazzei

Italy’s specialized Business Courts dealing exclusively with cases involving industrial property, company law, public contracts, and services and European Union public works contracts were created in 2012 as a way to help businesses cope with the country’s slow and overburdened civil justice system. The idea was to guarantee the speed and quality of legal judgments on technically complicated material with high economic impact.

But five years on, a rising caseload and a shortage of staff are weighing on these courts and are leading to a rise in the backlog and duration of lawsuits.

The results have in the large part been achieved, but they risk being called into question due to the constant growth in pending procedures and by the lengthening of the time needed to resolve disputes.

Based on figures from the justice ministry, which surveyed 18 of 22 business tribunals, (Cagliari, Catanzaro, Trieste and Bolzano are missing) pending trials as of December 31, 2016, amounted to 9,900, 20.1% more than those of 2015 and 72% more than 2013.

Over the years, resolutions of disputes have also increased: in 2015 and 2016, the number of concluded cases with respect to those registered in the same year surpassed 80%, versus 50.42% in 2013 and 67.3% in 2014. But the increase in productivity of the tribunals was not enough neither to cope with new cases nor to clear out the old ones.

In these four years, registrations have in any case grown: in 2016 there were 6,755, 11.5% more than those in 2015. As a result, a progressive increase in the backlog and times of resolution of disputes has developed. In 2016, the percentage of disputes whose resolution required less than a year fell to 57%: in 2015 that figure stood at 61% and in 2014 it was 74%.

The process is decisively faster for cases that do not end with a sentence, which required about 333 days in 2016 (but in 2015 the amount was 285 and in 2014 it was 224). To reach a sentence, 970 days are needed, about 2 years and 8 months. In this case, the increase is 100 days compared to 2015 and 194 (six months and a half) compared to 2014.

Quality of sentences
If the figures on time and pending cases (different from office to office) point to the difficulties facing the tribunals, the confirmation of sentences in successive appeals shows the quality of pronouncements and the effectiveness of the specialization of magistrates. In Milan, according to the ministry, verdicts are upheld in 70-80% of cases.

“Predictability and upholding are two fundamental factors,” said a spokesperson for Italian employers' association Confindustria. “This is because they have a deflating effect and they limit the dispute. For this reason, despite the increase in time and backlog, the positive aspects prevail over the negative. We should nevertheless push on the specialization side, because in sites such as Milan and Naples, in which it has been carried out, the results are there and the appreciation of companies is very high.”

The courts are meant to be specialized. But in the large part of tribunals, the goal of focusing only on industrial property, company law, public contracts, and European Union public works contracts is still one to be achieved. The main reason is that in many sites the number of cases is low (in 2016 a third of tribunals surveyed by the ministry had handled less than 100 cases a year) so is not large enough for judges to be dedicated in an exclusive way. But there is no business-dedicated court even in Rome, where the number of registrations is significant and second only to Milan. There are then also lacks in staffing levels.

“In Venice, there are no lawyers expert only in business issues because there were not sufficient magistrates,” said Liliana Guzzo, president of the business section and the first civil section. “But now thanks to a small increase in staffing, we are trying to build a business court. Also because in the second half of 2016 there was a sharp increase in registrations due to the crisis of the two big Veneto regional banks. In these first months of 2017 we have already received more registrations than in all of 2015.”