Speech by Amb. Giulio Terzi on justice in Italy

Speech by Amb. Giulio Terzi on justice in Italy

On 5 September Amb. Giulio Terzi, President of the Global Committee for the Rule of Law “Marco Pannella” (GCRL) took the floor at the meeting “We can’t wait for justice to take its course! Reform the justice system now” organized in Rome by the Nonviolent Radical Party Transnational Transparty (NRPTT).

Speakers included Giovanni Maria Flick President emeritus of the Constitutional Court and former Minister of Justice, Tullio Padovani, professor of Criminal Law at Sant’Anna School of Advanced Studies in Pisa, MPs and Senators. The meeting was introduced by Radio Radicale director Alessio Falconio. The video of the meeting is available on this page of the website of Radio Radicale.

Text of the speech of Amb. Giulio Terzi:

The mission carried out on June 20th at the Palais des Nations in Geneva by a delegation of the NRPTT and the GCRL, with Matteo Angioli and Laura Harth, has allowed us to further seize both the most relevant bodies of the United Nations and closest Member States to us, to our daily commitment in support of the rule of law and liberal democracy throughout the world. I think it is very important to frame today’s debate on the reform – or rather, on the reforms – of justice in Italy in a more adequate transnational and global dimension. Essentially, for two reasons:

1) Among the factors that contribute to the erosion of liberal democracy, probably no one stands out more than that of Justice, with its institutional and normative structure, and its formal and substantial application.

2) In Italy, the issue of justice is caught up in a very special plight stemming from the conditions that affect both criminal and civil justice, especially as far as the treaties and international agreements which our country is party to are concerned.

There are many areas of our justice system that over the last decades have been the object of often tormented and suffered interlocutions with the main European institutions, in particular the Council of Europe, the European Court of Human Rights (ECHR), the European Commission and other instances of European political governance. For these two reasons, the first one being the transnational and global dimension of the “justice issue” in the implementation of the rule of law and in the much needed relaunch of liberal democracy and the second one being Italy’s credibility regarding the commitments made in an area of extreme importance for the future of the European Union, the reforms to the criminal and civil justice system are an indispensable requirement also for our foreign policy, for the affirmation of our role and national interest.

The state of justice in different countries plays a considerable role in the findings of Freedom House. They show how persistent the involutive tendencies of the rule of law are:

Democracy faced the most serious crisis in the last months of 2017, as core principles ranging from free and fair elections, minority rights and freedom of the press fell constantly under attack.

Seventy-one countries have suffered a visible deterioration of political rights and civil liberties, while 35 have seen an improvement. We are in the twelfth consecutive year of global decline in freedoms. 113 countries have seen a sharp decline and only 62 have recorded a marked improvement.

The United States seem to have considerably reduced, if not relinquished, their traditional role as supporters of human rights and democratic freedoms at the global level, as involutional symptoms seem to have set foot domestically as well.

In respect of the reforms that our criminal justice system badly needs and which affect the credibility and therefore the position of our country internationally, priority must be given to an effective fight against corruption. Transparency International 2017 Report ranks Italy 54th in the Corruption Perceive Index marshalling rock-solid data showing how Italy has steadily worsened over the past six years. Within the EU only Slovakia, Croatia, Greece, Romania, Hungary and Bulgaria share this lamentable position in the fight against corruption. Twenty-one member states, including not-corrpuption-free Cyprus and Malta, score better than Italy; the other five founding countries of the European Community are in the top 23 places.

Should someone suspect that such statistics are way too technical or overtly biased – it is never too late to put the blame on others than ourselves – there is plenty of findings and data that corroborate and emphasize the devastating effects of corruption for the Italian society and economy and for our international standing. The Corriere della Sera reported yesterday a study by the Happiness Research Institute of Copenhagen: 75% of the changes in quality of life depend, according to the UN World Happiness Report, on the action of Governments. Unsurprisingly, north-europeans countries are in the lead, while Italy lags behind in 47th position. According to these reports, Italy is especially affected by corruption. Several economists describe it as a horrible “tax on the poor” because of the massive amount of resources hijacked from the national budget imposing a heavy burden on public services and infrastructures.

In respect of the European Union, it is hard to disagree with a resolution adopted by the European Parliament on 25 October 2016 which established an EU mechanism on democracy, the rule of law and fundamental rights. It is worth taking some extracts of that resolution to understand how the various proposals that are now being discussed in terms of the reform of Justice in Italy should contribute to “move towards a shared culture of the rule of law as universal value in the 28 Member States and in the Union institutions” (paragraph B), “vital importance to establish an area of freedom, security and justice without internal borders” (paragraph I), “whereas safeguarding the rule of law and effective independent justice systems play a key role in creating a positive political environment able to regain public trust in institutions, and hence also for an investment-friendly environment and for providing greater regulatory predictability and sustainable growth” (paragraph M).

The Council of Europe, the Venice Commission, organizations such as Transparency International and others have long provided indications on reforms in the field of criminal and civil justice. The fight against corruption has been constantly reaffirmed. The tools are clear. The way to gradually deploy them is a matter for debate between Government and Parliament. The so-called DASPO, namely a perpetual banning order from doing business with public administration after a first-tier conviction, undercover agents, embezzlement prosecutable ex officio, extension of the category of prosecutable offenses, are partial measures that the European anti-corruption Group and the OECD urged us time ago. The revision of the abbreviated prescription terms, the possible innovations on wiretapping and whistle blowers is also under discussion. The decisions that will be made will certainly influence the assessments by governments and European institutions on the suitability of reforms that Italy has pledged to implement though European Treaties and the Council of Europe.

Criminal justice requires a qualitative leap as far and prevention and repression of crime are concerned. Addressing corruption and organized crime is crucial for economic and political relations, as well as fro judicial cooperation and security between us and other EU partners. At the same time, negative experiences in our country led to a widespread 20-year oversimplified confrontation between justicialists and upholders of the law. The principles of legality and the rule of law, that the Nonviolent Radical Party has always protected unconditionally, must be upheld steadfastly. The right to fair trial, serving a prison sentence, prison conditions, rejection of torture, ban for alleged mafia activities, just mention a few, remind us how difficult it is to strike the right balance.

On civil justice, attention needs to be paid to the impact that current situation produces on our national interest in supporting the economy of the country and its globalization. The efficiency of civil justice plays a significant role as far as the possibility doing business in a given country is concerned. Over the last few years, several studies by the Bank of Italy and by think-tanks such as the Luigi Einaudi Onlus Foundation have come to similar conclusions.

International investments aimed at securing long-term shares in foreign companies or seeking to establish overseas branches requiring a certain degree of involvement both of the investor in the management and of the investee or incorporated company, are hindered by slow enforcement of contracts and uncertainty in the conclusion of a judicial case. Malfunctions like these discourage companies to access a given market and drive investors away to relocate where disputes are resolved quickly.

According to a study conducted by the Einaudi Foundation, global reputation is a decisive factor in favoring competitiveness and attractiveness of a country. By running comparative statistical surveys, the study concluded that, despite the strengths of cultural indicators and lifestyles, reputational negative performances exist. For example, the New York-based Reputation Institute ranks countries according to their “Business environment”, “Technologically advanced”, “Effective Government” and “Ethical country”.

Interestingly, in the last five years the negative impact of dysfunctional civil justice systems on foreign direct investments (FDI) has increased. The trend is visible despite the difficult data collection and the generalized decline in investment caused by the reduction in growth.
In 2013, when Italy had repeatedly been recalled by the EU on the problem of civil justice, FDI was only 12 billion €, scoring a 58% fall compared to five years earlier and our country cut out a modest 1.6% of the global total of FDI, compared to 2.8% of Spain, 3.1% of Germany, 4.85% of France and 5.8% of the UK. The reasons for the lack of capital inflow – according to the Einaudi Foundation – should not be attributed solely to the slowness of civil justice, although it is undeniably one of the main factors.

– The latest available statistics are eloquent:

Data from the “World Investment Report” 2017 and 2018, published by UNCTAD:

2015 2016 2017
21 mld/$ 22 mld/$ 17 mld/$

2015 2016 2017
47 mld/$ 35 mld/$ 50 mld/$

2015 2016 2017
33 mld/$ 17 mld/$ 35 mld/$

2015 2016 2017
12 mld/$ 20 mld/$ 19 mld/$

2015 2016 2017
69 mld/$ 86 mld/$ 58 mld/$

Likewise, the publication of October 2017 “Civil justice in Italy: recent developments”, by the Bank of Italy, reported similar figures. It is worth reminding some of the points in the Report:

– Lenghty trials in Italy remain a significant issue, with important differences between the courts that lead to organizational dysfunctions. Evidence suggests that the recent judicial geographical review has not yet produced improvements in respect of the capacity to deal with the backlog, but it contributed to reduce ordinary litigation.

– The relevance of an efficient judiciary can be easily appreciated if we take the thesis linking companies to a network of contractual relationships of different kinds (financial, labor and commercial ones). Productive efficiency can be achieved only if all these contracts receive adequate protection. In its absence, companies find it difficult to sustain themselves financially; incertainty and costs associated with disputes with workers and business partners will increase; investments will bediscouraged, especially in innovative and risky activities more difficult to protect; poor decision-making will grow as far as organization of production and management of internal structures are concerned. The combination of all these factors disrupts the achievement of satisfactory results.

In conclusion, empirical analyses show that lengthy trials produce negative effects on the participation of companies in global value chains (Accetturo et al., 2015) and on their size (Giacomelli and Menon, 2016). Giacomelli and Menon show that a 50% reduction in the duration of civil procedures would increase the average size of manufacturing companies by around 10%. Moreover, inefficient justice affects the financing conditions of households (Fabbri and Padula, 2004) and companies as well (Jappelli et al., 2005; Magri, 2010). Jappelli et al. estimate that an increase of 10 pending cases per 1000 inhabitants generates a 1.5% reduction in the ratio between loans and GDP. Finally, Coviello et al. (2017) findings show that delays in delivery of public works are more likely to occur where justice is less efficient, because of the reduction in the expected value of the sanction imposed.

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