The first-instance judgment is already enforceable. What now?

Many business owners do not know that the judgment by which the first-instance court ordered them to pay is provisionally enforceable, even if they intend to appeal it (Art. 282 of the Code of Civil Procedure). They find out when they are served with the atto di precetto, a formal notice to comply within a period of not less than ten days, with the warning that otherwise enforcement will follow (Art. 480 of the Code of Civil Procedure). For a business this means exposing bank accounts and receivables from customers to attachment, with liquidity strains arising while the case is still pending.

Winning and losing in the same decision

In disputes over long-term contracts, such as distribution or supply agreements, it is not unusual for the same business owner to win on one point and lose on another: the court declares the contract terminated for the other party’s breach and, at the same time, orders the business owner to repay part of the sums received. This is not necessarily a contradiction. Termination has retroactive effect between the parties, but in contracts for continuous or periodic performance it does not extend to performance already rendered (Art. 1458 of the Civil Code): it therefore becomes crucial to distinguish what was paid for work actually carried out from what was advanced without any counter-performance. In any event, the right to damages is preserved (Art. 1453 of the Civil Code).

Applying for a stay

The main tool is the application to stay enforceability, to be made in the notice of appeal. Art. 283 of the Code of Civil Procedure sets two alternative conditions: that the appeal appears manifestly well founded, or that enforcement of the judgment may cause serious and irreparable harm, even where the judgment orders the payment of a sum of money, also in view of the possible insolvency of one of the parties.

The second condition is of direct interest to businesses. If the other party may be unable to repay what it collects, immediate payment can turn into a final loss, even if the appeal succeeds. The harm must therefore be carefully documented, with financial statements, company register extracts, protested bills, information on pending enforcement or insolvency proceedings and any other evidence showing that it is real.

Bringing the decision forward

As a rule the court decides on the application at the first hearing. Art. 351 of the Code of Civil Procedure, however, allows an earlier decision to be requested, which is useful above all when enforcement is imminent. Before the court of appeal the request is made by application to the presiding judge, who by decree orders the parties to appear in chambers and, if there are justified reasons of urgency, may provisionally order an immediate stay; after the hearing the panel confirms, varies or revokes the decree by an order that cannot be appealed.

The application should not be made lightly, however: if it is inadmissible or manifestly unfounded, the court may order the party that filed it to pay a penalty of between €250 and €10,000 (Art. 283(3) of the Code of Civil Procedure).

A first-instance judgment can be enforced at once, even while the appeal is being prepared.

The notice to pay: what can be challenged

If in the meantime the notice to pay is served, an objection can be filed disputing the other party’s right to proceed with enforcement (Art. 615 of the Code of Civil Procedure). Where there are serious reasons, the court, on the objector’s application, stays the enforceability of the title; if only part of the claim is in dispute, the stay is limited to that part. The objection, however, is not a second appeal: where the enforcement title is a court decision, it does not serve to reopen the case but to raise matters relating to enforcement, such as amounts demanded in excess of those awarded or payments made after the judgment. It must therefore be coordinated with the appeal, because the two remedies are heard by different courts and pursue different aims.

Practical advice

To anyone in this situation I suggest:

• reading the judgment at once and calculating the time limits for appealing;
• assessing whether the conditions of Art. 283 of the Code of Civil Procedure are met and gathering documents on the other party’s solvency;
• carefully checking the amounts and items in the notice to pay, bearing in mind that the time allowed for compliance may be as little as ten days;
• considering, where possible, a negotiated solution, because even on appeal a settlement may be the most rational choice.

An appeal upheld when the business’s assets have already been seized may turn out to be a purely formal victory: protective steps should therefore be taken from the moment the judgment is published.