The legal assistance needed in cases of violation of shareholders’ agreements and for attribution of jurisdiction in case of foreign companies with Italian partners has been relevant in the decision of 26 November 2020 n. 26984 of the Court of Cassation, which ruled on the question of jurisdiction raised in the context of a compensation action deriving from the violation of a shareholders’ agreement.
Legal assistance in cases of violation of shareholders’ agreements and identification of the correct jurisdiction.
The shareholder of a limited company in a foreign country in the EU requested compensation for damages caused by the violation of the shareholders’ agreement by the managing partner domiciled in Italy. As a matter of fact, it was considered that the judge should have been Italian, given that the defendant’s request to attribute jurisdiction to the judge of the EU country, in which the limited company is based, was accepted in the appeal proceedings. The Court of Appeal had established the conditions for the shareholder domiciled in Italy to be summoned before a foreign judge were that the dispute concerned:
- contractual issues;
- civil offences;
- compensation for crime.
The principle of proximity of the judge in international law
The proximity principle is a requirement to refer to for attribution of the judge in case of a crime, and in this case of violation of shareholders’ agreements. In fact, the judgment of the Court of Appeal mentioned that:
- the company had been established in a foreign EU member State;
- the notary who established the company was a citizen of the EU member State where the company was established;
- the defendant, although domiciled in Italy, was also director of the foreign company;
- given these circumstances and on the basis of the principle of proximity to the case, the judge could only be that of the foreign state.
The overruling of the Court of Cassation
The Supreme Court, however, has overruled the judgment of the Court of Appeal and decided that the judge must be that of the place where the defendant is domiciled, i.e. Italy, and not that of the place where the company is based – i.e. the foreign State. The judges of the Cassation Court, when considering the attribution of jurisdiction for the dispute of the violation of the shareholders’ agreements, referred to the EC Council regulation 44/01. The regulation only identifies certain cases of concurrent, although not exclusive jurisdiction, which does not imply the derogation from the general criterion of international law that applies Italian jurisdiction to the defendant’s domicile or residence in Italy.
Moreover, the Cassation Court decided against the extensive application of the exclusive court of law provided by art. 22, par 2, of Regulation 44/01, as it only applies to disputes concerning the validity, nullity or dissolution of the company and legal persons, and on the validity of the decisions of the respective bodies within the company. In such cases, legal advice might have led to the jurisdiction of the judge of the country where the company is based. In this specific instance, however, the non-fulfillment and the violation of the shareholders’ agreement does not concern the validity of relationships within the company, but has relevance for the relationships between shareholders. All that is left to do is wait for further developments in case-law, to verify whether the above-mentioned principles of law will still be confirmed by Italian as well as European jurisprudence.