Where insurers indemnify their insured they are entitled under Italian law to pursue a subrogated action against the third party liable for the damage/loss (article 1916 civil code).
The insurer becomes entitled to take over the interest of the assured and is subrogated to all the rights and remedies of the assured as from the time of the event causing the loss, but is not entitled to exercise rights which are not available to the insured.
Defenses against the insured are also valid against the insurer, and defendants to such actions have increasingly contested insurers' title to sue on the grounds that the insurers may not properly be subrogated in their insured's rights.
Under Italian law there are in fact two principal systems of subrogation:
a.by agreement and/or assignment of rights; such agreement can be simultaneous with payment (pursuant to article 1201 c.c.) or may follow the payment by means of assignment of rights (pursuant to article 1260 c.c.).
b.is by operation of law, pursuant to article 1916 civil code: where the indemnity is paid pursuant to a valid contractual obligation, the insured's rights will automatically be transferred to the insurer.
Validity of the subrogation
Many disputes have arisen over the last twenty years in cases where the transmission of rights appeared to be flawed, either because the subrogation agreement was not concluded at the same time as the indemnity was paid, or because insurers were not bound to pay the indemnity under the policy, and third parties who would otherwise have been liable to the insured have been able to challenge the subrogated insurers' action.1
It is settled case-law that the defendant is entitled to ask for the disclosure of the insurance policy in order to check whether the indemnity has been paid in favor of the party having insurable interest, and in case it transpires that the indemnity was wrongly paid (i.e. in favor of a party not exposed to the risks of transit) the subrogated insurer may fail to succeed in pursuing the recovery action.
Insurers are therefore required to check accurately whether they are going to indemnify a party entitled to receive the indemnity.
As a general rule, under Italian law title in goods automatically passes from the seller to the buyer at the conclusion of the contract of sale of specified goods; in case of sale of unspecified goods title in goods passes to the buyer once the goods are identified; when goods must be carried from one place to...