Parent company not liable for acts of their subsidiaries

(Court of Appeal of L’Aquila 13 March 2019)

by Bonaventura Minutolo and Francesco Torniamenti

Two policyholders had contracted some policies with an insurance company that had not fulfilled the subsequent request for redemption of the contracts. The issuing company was then merged with another company, which in turn was controlled by the parent company. The policyholders therefore sued the parent company and affirmed its liability for the debts of the merged company. In the Court of First Instance judgment, officiated in the default of the defendant company, the Court accepted the plaintiffs’ request, condemning the defendant to refund to the insured all the amounts covered by the request, pursuant to art. 2504 bis of the Civil Code, for which “The company that results from the merger or the merging company, assumes the rights and obligations of the companies participating in the merger, continuing in all their relations, including procedural ones prior to the merger”.

The ruling was appealed on the basis that it was not the owner of the legal relationships because the issuing company had been incorporated by another company which, although part of the same group and in turn controlled by the appellant, was – with respect to this – a distinct and autonomous subject. The Court of Appeal, having ascertained the above, excluded the traceability of the reports raised in the case to the parent company since this had not directly incorporated the company that issued the policies. There was therefore a lack of legitimacy to uphold the appellant’s case, a failure that could well have been raised for the first time on appeal, since it was an exception that could also be detected ex officio.

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