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The confiscation measure examined in this essay is provided for in Article 44 § 2 of Presidential Decree no. 380/2001 (hereinafter, “Construction Code”), under the heading “Criminal sanctions”. Article 44 § 2 states: “In a final judgement establishing that there has been unlawful site development, the criminal court shall order the confiscation of the unlawfully developed land and the illegally erected buildings. Following the confiscation, the land shall pass into the estate of the municipality on whose territory the site development has been carried out. The final judgement shall constitute a document of title for immediate entry in the land register”.
1. Nature of the confiscation
Over the past few decades many legal scholars and the Italian Constitutional Court’s jurisprudence (decision no. 187 of 1998) agreed to acknowledge confiscation under Article 44 § 2 as an administrative sanction. The measure in question, despite being issued by a criminal court, was deemed different to the additional penalties prescribed by the Criminal Code under Article 240 § 1, 2 which, still, are referred to as means of “confiscation” under Italian law.
More specifically, confiscation under Article 240 § 1 of the Criminal Code is not mandatory; it can be imposed without conviction and the confiscated site is transferred to the municipality in which the territory is located and not to the state. Confiscation under Article 240 § 2, nonetheless, requires possession of specific illegal material in order to be issued (Court of Cassation judgement no. 12989/2010).
However, in light of the punitive and deterrent nature of the confiscation under Article 44, taking into account the extensive effects of the seizure of the entire site and the illegally erected buildings, the European Court of Human Rights (Sud Fondi, 2009) stated that this measure must be considered as a criminal penalty for the purposes of Article 7 of the Convention. Consequently, the Italian courts have changed their line of interpretation pursuant to the European Court and have acknowledged the criminal nature of the confiscation, which eventually leads to the application of a set of safeguards enshrined in Article 7 of the European Convention.
2. Confiscation imposed on third parties
In order to assess the legal implications of imposing the confiscation under Article 44 to third parties, we need to take into account two main issues. The first pertains to the third parties’ behaviour (good or bad faith) and the second to the remedies granted by law that can be exhausted to put right any violation of property rights.
The expression “third parties” refers to persons who are not accused of being responsible for the unlawful site development and who are entitled to claim ownership or other property rights on what is subject to the confiscation measure. This may include the heirs of the owner or the purchaser of the plots of land.
In the context of confiscation under Article 44, third parties are considered to have acted in good faith when they have displayed proper care of the acquisition of the property but have, nonetheless, been subject to the confiscation order. Alternatively, those who intentionally knew or should have known the unlawfulness of the site development are considered to have acted in bad faith.
Previously, the Italian Court of Cassation assumed that a confiscation order could also be issued to owners who were not parties to the criminal proceedings and that were consistent with the rules of vigilance in acquiring the property at stake (Court of Cassation judgements no. 38728/2004 and 10916/2005), i.e. bona fide third parties. This radical position was based on the assumption that confiscation under Article 44 is a mandatory administrative sanction that the criminal court is entitled to impose once the crime of unlawful site development has been formally ascertained, whether third parties have allegedly failed to meet standards of good faith or not. Consequently, the only remedy left to bona fide third parties was to seek redress before civil courts.
Nevertheless, after the Sud Fondi judgement (2009) where the European Court of Human Rights classified the sanction as criminal in nature, the Court of Cassation stated that good faith third parties could no longer be subject to orders of confiscation (Court of Cassation judgement no. 39715/2010 and, more recently, 8350/2019). Moreover, as decision no. 49/2015 of the Constitutional Court pointed out, “in criminal proceedings the burden of proof for establishing the bad faith of a third-party buyer, whether criminally liable or not, fell upon the prosecution”.
Italian case law regarding confiscation against third parties is also reflected in EU law. Pursuant to Directive no. 2014/42 it is prohibited to issue any confiscation order against third parties acting in good faith, whereas it is permitted to freeze assets of third parties who “knew or ought to have known that the purpose of the transfer or acquisition was to avoid confiscation, on the basis of concrete facts and circumstances”.
3. Remedies granted to third parties
Third parties’ defense rights are differently protected with respect to their position regarding the criminal proceedings for the unlawful site development. If a person is participating in the proceedings, he or she could ordinarily appeal the decision of confiscation. If third parties are not involved in the proceedings but have come to know of the ongoing procedure, they could rely on the remedies enshrined in Article 257 (review of the probative seizure), Article 322 (review of the preventive seizure) or Article 355 (review of the seizure issued by judicial police) of the Italian Code of Criminal Procedure. Moreover, third parties can participate in the hearing requested by the accused since their interests are also concerned (Article 127), or file a request of restitution (Article 262). If third parties are informed of the confiscation measure only at the end of the criminal proceedings, they can uphold their defense rights by filing an enforcement review. Within this kind of review, Italian law guarantees the right to a fair hearing and other principles of due process, pursuant to Article 666 § 5 of the Code of Criminal Procedure. Although the judge in charge of the enforcement must respect the final conviction, they can still lawfully evaluate the degree of fault accountable to the third parties for the sole purpose of assessing the confiscation’s validity. As a last resort, third parties are entitled to seek redress before the civil courts (Court of Cassation judgement no. 34882/2010).
4. Third parties with legal personality
In theory, third parties subject to confiscation measures can be physical as well as legal persons. Yet, Article 44 § 2 of the Construction Code does not mention such a distinction with respect to the application of the confiscation. The question of whether third parties with legal personality can be lawfully subject to confiscation under Article 44 was addressed by the European Court of Human Rights in G.I.E.M. S.r.l. and Others v. Italy (2018), and subsequently by the Italian Court of Cassation (judgement no. 3979/2018), which implemented the judgement of the European Court.
In G.I.E.M S.r.l. the Court of Strasbourg stated that the imposition of a criminal sanction, like confiscation under Article 44, on legal entities which have not been parties to the proceedings for the unlawful site development, is not compatible with Article 7 of the Convention.
Article 7 of the European Convention of Human Rights lays out the legality principle (“nullum crimen nulla poena sine lege”) whereby criminal liability is personal, therefore it is prohibited to hold others accountable for one’s criminal offences. In addition, under Italian law, the principle “societas delinquere non potest” has normative force. The rule enshrined in the Latin maxim states that legal entities can neither commit crimes nor be parties to criminal proceedings.
Consequently, stemming from these principles, the European Court’s decision asserted that the imposition of confiscation to companies not parties to the criminal proceedings, taking into account that the measure is a criminal penalty under due process safeguards, is not consistent with Article 7 of the Convention.