Perhaps it’s not by chance that Italy is home to a quarter million lawyers, Europe’s highest number relative to population. It’s very common here for an even minor business controversy to end up before court and stay there over years. Big global banks know very well this issue as almost all of them were sued in recent times by local governments in the hundreds over allegations they sold them derivatives contracts without fully disclosing risks and costs of the deals. The concept that Italy’s judicial system has become a sort of partial substitute for politics and other institutional regulators over the last 20 years, after the so called First Republic went down amid the Tangentopoli (Bribesville) scandal, is widely accepted in the public opinion of the country –a view shared by international observers too. The problem is that when justices becomes the ultimate business regulator all the system risks getting jammed while the fear of being caught in endless legal litigation may keep investors at bay. In addition, there are specific Italian institutions which contribute to make things even more complicated. One of that is the Tribunale Amministrativo Regionale, a district court before which anyone, individual or business, can appeal against a decision of a state body, including market regulators. If, for instance, the Antitrust authority rules that a certain merger cannot be done because it hurts free competition, the concerned interests can appeal before TAR, which can in turn override the Antitrust ruling. The TAR itself can be appealed against before the Consiglio di Stato, or State Counsel, which is the highest degree of administrative justice.
Often important business controversies take decades to be settled. Take the case of Rovelli against Imi. In 1982 Nino Rovelli, a chemical entrepreneur, sued Imi, then a state-owned lender now part of Intesa Sanpaolo, for allegedly having caused his companies go bankrupt as the bank denied them the credit they needed. The compensation request was a record one trillion lira, then the country currency, still in the hundreds of millions of today’s euros. The case went before a number of commercial and even criminal courts to be eventually settled only in 2006, one quarter of a century later. Obviously, all of this has not prevented international investors from doing business in Italy. At the opposite, even in recent years, from Qatar to the US, from France to Germany to Spain to Russia and China, investors from all over the globe are just rushing for bargains here, as their expectations of a superior return more than balances the disadvantage of an intricate judicial and regulatory system –which, by the way, can only improve over time.