Telecom Italia Wins in Rome Court of Appeal

Cleary Gottlieb represented Telecom Italia (TIM) in its win before the Court of Appeal (Civil Section), Rome, in relation to liability of the State in its judicial capacity for Council of State ruling.

In the complex case concerning the payment of the concession charge for the operation of fixed and mobile telecommunication services for the year 1998, on March 13, 2024, the Court of Appeal (First Civil Section), Rome, upheld in full TIM’s reasoning in its claims for compensation against the Italian State.

In particular, the Court of Appeal upheld TIM’s appeal against Judgment No. 6174/2015 of the Court of Rome, which had considered TIM’s action to obtain compensation for damages arising from Judgment No. 7506/2009 of the Council of State inadmissible for lack of territorial jurisdiction. The issue of territorial jurisdiction has now been resolved in light of a case-law approach that has been settled in recent years regarding the liability of the State in its judicial capacity arising from the activity of judges belonging to jurisdictions or offices not set out on a district basis.  In line with the conclusions of the Supreme Court of Cassation developed with reference to the decisions of the Supreme Court of Cassation itself (Judgment Nos. 14842/2018 and 13475/2019), the Council of State (Judgment No. 26072/2019), and the Court of Auditors (Central Jurisdictional Section) (Judgment No. 612/2022), the Court of Appeal considered that TIM’s claim had been properly submitted before the Court of Rome, thus finding it admissible in relation to territorial jurisdiction.

On the substance, the Court of Appeal considered “the significant nature of the violation of Community law by the Council of State which, in a somewhat artificial manner with respect to the clear ruling of the European Court of Justice, to which the issue had been referred by the Regional Administrative Court, Lazio, in essence disapplied European law” (paragraph 7 of the judgment concerned). In other words, the transposition of Directive 97/13/EC had resulted initially and for 1998 only in the extension of the application of the previous regime beyond the deadline for the transposition of the directive itself, with the consequent obligation on the part of fixed and mobile telephone operators to pay an annual concession charge proportionate to turnover. Despite the fact that the conflict of such a transposition with Directive 97/13/EC had been pointed out in the clarification provided in 2006 by the Court of Justice in a preliminary ruling (judgment of February 21, 2008, C-296/06), neither the Regional Administrative Court (Judgment No. 11386/2008), nor the Council of State (Judgment No. 7506/2009) had disapplied the relevant rules of national law and followed up on TIM’s requests for restitution. In light also of the Court of Justice’s further ruling of March 4, 2020 (C-34/19) and Order No. 18603/2020 of the Supreme Court of Cassation, the Court of Appeal now recognizes the unlawfulness of the State’s claim for payment of the 1998 charge and orders by way of compensation an amount equal to that paid to the State at the time, reassessed and with accrued interest, of approximately €1 billion in total.

This is the first time in Italy that the State has been condemned to pay €1 billion in damages from a judgment by the Supreme Administrative Court (the Council of State) and deemed to be in violation of the EU law.