Background
Banca Sistema S.p.A., an Italian factoring company, acquired debts held by private companies against the municipality of Cosenza. District courts in Cosenza and Catanzaro issued injunctions in the company’s favor between 2017 and 2021, recognizing the municipality’s obligation to pay. The municipality paid only partially.
In November 2019, after the company initiated collection efforts, the municipality declared itself insolvent and commenced insolvency proceedings under Italian law. The applicant company requested inclusion on the creditor list, as required by the applicable statute (TUEL Article 248). However, that same statute prohibited it from initiating or pursuing independent enforcement proceedings while its claim was registered in the insolvency process. The injunctions remained unenforced for periods ranging from over two years to more than seven years.
The company complained to the ECHR that Italy had violated its right to a fair hearing (Article 6 § 1) and its right to peaceful enjoyment of possessions (Article 1, Protocol No. 1).
The Court’s Holding
The ECHR held unanimously that Italy had violated both Article 6 § 1 and Article 1 of Protocol No. 1. The Court emphasized that execution of a judgment is an integral part of the right to a fair hearing. Although a state may need time to verify claims in an insolvency proceeding, delays spanning multiple years without enforcement constitute a disproportionate restriction on both the right of access to court and the right to peaceful enjoyment of property.
The Court rejected Italy’s argument that the applicant company had implicitly accepted the delay by joining the insolvency proceeding. The Court noted that the company had no realistic alternative—the TUEL barred it from pursuing independent enforcement while its claim was on the creditor list. The authorities had not deployed all necessary efforts to enforce the decisions in due time.
Italy was ordered to ensure enforcement of all domestic decisions within three months from the judgment’s finality. The Court declined to award damages for lost profit, finding that the company had accepted commercial risk by acquiring the debts while aware of enforcement problems. However, it awarded €500 in costs plus applicable tax.
Key Takeaways
- Execution of court judgments is an essential component of fair trial rights under Article 6; prolonged non-enforcement violates the Convention.
- Municipal insolvency does not exempt a state from fulfilling court judgments; delays of multiple years are disproportionate and unjustified.
- Creditors cannot lose substantive rights by participating in mandatory insolvency procedures; forced participation does not waive enforcement rights.
- The Court reaffirmed consistent precedent (Hornsby, Ventorino, De Trana, De Luca) that Italy continues to violate these protections in similar factual scenarios.
Why It Matters
This judgment reinforces a critical principle in European human rights law: financial difficulty does not permit states to indefinitely suspend enforcement of final judicial decisions. It is particularly significant for companies that extend credit to public entities or acquire claims against them. The ruling signals that domestic procedures—even formally structured insolvency regimes—cannot shield states from their obligation to satisfy enforceable judgments within a reasonable period.
The decision also highlights systemic dysfunction in Italian municipal finance and debt recovery. The Court’s repeated findings of violation in parallel cases (six similar judgments cited) suggest endemic problems in Italy’s handling of municipal insolvency that demand legislative or administrative reform, not case-by-case ECHR intervention.