Corporate Compliance: A Ruling from the Court of Milan Further Clarifies How to Prevent Corporate Criminal Liability in Case of Directors’ Criminal Violations

The Italian Supreme Court recently stated that the director’s criminal liability cannot automatically trigger the recognition of corporate criminal liability, as company’s organizational fault must be specifically demonstrated by the Public Prosecutor.[1] Now, the Court of Milan[2] specifically clarifies how an appropriate and effective Organization, Management and Control Model (Model 231) pursuant to Italian Legislative Decree 231/01 (Decree 231) can shield the company from corporate criminal liability.

On January 25, 2024, the Court of Milan convicted the senior managers of an Italian joint-stock company (owned by a foreign-based multinational company) for false corporate communications, pursuant to Article 2621 of the Italian Civil Code (ICC), which provides the criminal liability of directors, general managers, managers in charge of preparing corporate accounting documents, auditors and liquidators when they represent false material facts or they omit material facts whose disclosure is required by law concerning the economic or financial situation of the company or the group.

The Court’s Overview of the Preconditions for Corporate Liability for Criminal Violations

In addition to the analysis of the liability of natural persons, the Court of Milan examined the legal requirements for the company to be deemed liable for crimes committed by


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Claim for Damages Against Directors of a Foreign Company: Do Italian Courts Have Jurisdiction?

Corporate disputes often have a transnational dimension, including in connection with directors liability for wrongdoing. Italian courts are frequently called to decide claims against corporate directors with links with other legal systems, such as the company being incorporated under the laws of a foreign State. This poses relevant procedural issues.

The Court of Milan (decision no 4789/2023) provided valuable insights on the application of the criteria to determine jurisdiction and applicable law in case of a claim brought by a shareholder of a company incorporated outside Italy against the sole director (having his domicile in Italy).

The Dispute

The dispute originates from a complaint brought by the minority shareholder of a limited liability company incorporated under the laws of the United Republic of Tanzania, against the other shareholder and sole director of the company (an Italian resident), allegedly responsible for misappropriation of company’s funds. On these grounds the minority shareholder (assuming that Italian substantive law was applicable to the dispute) brought two actions against the sole director:

  • a derivative claim under Article 2393-bis of the Italian Civil Code (ICC), according to which the minority shareholder is entitled to act against directors on behalf and in the interest of the

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UK General Election: Anti-PACCAR Bill Torpedoed

In a previous blog post, we discussed the introduction to Parliament of the Litigation Funding Agreements (Enforceability) Bill (the Bill), which was designed to introduce legislation that would reverse the outcome of the UK Supreme Court’s decision in R (on the application of PACCAR Inc and others) v Competition Appeal Tribunal and others.[1]

As we previously set out, the ruling in PACCAR was set to have significant ramifications for litigation funders, claimants and claimant law firms in the UK that rely on third-party funding, potentially threatening the financial viability of swathes of the litigation funding industry.  In PACCAR, the Supreme Court held that litigation funding agreements that entitle funders to be paid a portion of any damages recovered (as opposed to a multiple of the investment made by the litigation funder) are “damages-based agreements”, as defined in the Courts and Legal Services Act, and are therefore unenforceable unless they comply with the relevant regulatory regime.

The Bill proposed amending s58AA of the Courts and Legal Services Act, to insert a provision that “an agreement is not a damages-based agreement if or to the extent that it is a litigation funding agreement”.  A litigation funding agreement


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Supreme Court Clears the Air on ‘Force Majeure’ Clauses

The UK’s Supreme Court has issued an important judgment clarifying the extent to which parties are required to use reasonable endeavours to avoid force majeure.  Force majeure, or in layman’s terms ‘act of god’, is a specified, and generally unforeseen and disruptive, event which may mean that one or both parties to a contract are relieved from having to fulfil their obligations under it. In the present case, the underlying contract contained a force majeure clause, which included a provision requiring the party which was affected by the force majeure event to exercise reasonable endeavours to overcome it.

The relevant force majeure event took the form of US sanctions which effectively prevented payment by the charterer under an affreightment contract being made to a shipowner using US dollars.  The charterer instead offered to make payments in euros and to cover any losses arising to the shipowner through the conversion of those payments into US dollars. However, in what seems a somewhat counterintuitive decision, the Supreme Court unanimously found against the charterer, on the basis that the requirement on the shipowner to exercise reasonable endeavours to overcome the force majeure event did not mean that it had to accept performance that


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The Elusive ‘Anti-Anti-Arbitration Injunction’

The recent decision of the High Court in Euronav Shipping NV v Black Swan Petroleum DMCC [2024] EWHC 896 (Comm) illustrates when a party may be unable to enforce an arbitration agreement which is otherwise valid and enforceable. In the present case, Euronav succeeded in satisfying all of the elements of the test for an injunction which sought to restrain Black Swan Petroleum (BSP) from pursuing an anti-arbitration application before the Malaysian Courts. Nevertheless, in the exercising its discretion, the Court declined to award an injunction having regard to international comity and because it deemed that it would be vexatious and/or oppressive given the applicant’s earlier submission to Malaysian court jurisdiction. The case is a cautionary reminder of the need to pursue a carefully considered dispute resolution strategy.

 Facts

The applicant, Euronav, a firm involved in ocean transportation and storage of oil, entered into a contract with a Malaysian registered company, Silk Straits SDN BHD (Silk Straits), by which it made available certain tanks on the Motor Tanker Oceania (the Vessell) for storage of oil. A first addendum to the agreement provided for English governing law and exclusive jurisdiction of the English High Court, and recorded Euronav’s consent to prospective assignment


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