Author: admin

With resolution n. 46/E dated July 31, 2023, the Italian Tax Authority confirms the general application of the withholding tax exemption regime on dividends at the level of Swiss parent companies, foreseen by the agreement of October 26, 2004, between the European Union and Switzerland.

Article 9 of the aformentioned agreement (as resulting from the Amendment Protocol of May 27, 2015) states that the exemption applies under the condition that:

• The parent company directly holds at least 25% of the capital of the subsidiary for a minimum of two years, and one of the two companies is tax-resident in the EU, and the other in Switzerland;
• Neither of the two companies has tax residence for tax purposes in a third state by convention;
• Both companies are subject to direct taxation on profits without benefiting from exemptions and adopt the form of capital companies.

The issue arises from the previous interpretation provided by the Italian Tax Authority of the special holding regime provided in Switzerland by Article 28, paragraph 2, of the Federal Law on the Harmonization of Direct Taxes of the Cantons and Municipalities.

In fact, in the Italian Tax Authority resolution n. 93/2007, it was clarified that the withholding tax exemption on dividends distributed to parent companies resident in Switzerland could not be granted if these companies benefited from tax exemptions at any of the three levels (municipal, cantonal, and federal) of direct income taxation in that State. With the Italian Tax Authority Resolution 57/E of 2019, the exemption was granted on the condition that the Swiss parent company renounced the special regime.

The matter was also addressed by the Court of Justice of the European Union in case C1 of 2448/2015, Wereldhave Belgium, which considered denying the benefits of the parent-subsidiary directive only in cases of total exemption of profits. The Court held that “a company which (…) is subject to corporation tax at a rate of zero, provided that all its profits are distributed to its shareholders, does not satisfy the condition laid down in Article 2(c) of Directive 90/435 and does not, therefore, fall within the concept of ‘company of a Member State’ within the meaning of that directive.“

In particular, the Court of Justice found that excluding the withholding tax exemption in cases of only partial taxation would ultimately violate the spirit and objective of tax neutrality pursued by European law. This interpretation by the European judge appears consistent with the Agency’s own interpretation regarding the application of the exemption provided by Article 9 of the Switzerland-EU Agreement in cases of participation exemption (which essentially grants partial tax exemption): the Agency deemed that such an exemption does not constitute a preferential regime and, therefore, does not hinder the recognition of the withholding tax exemption at the source (see response n. 57/2019).

Furthermore, it should be noted that the Swiss tax reform of September 28, 2018, abolished, effective January 1, 2020, the favourable tax regimes, including the one for “mixed companies” (companies that, in addition to holding participations, also engage in commercial activities), which provided for exemption from taxation for cantonal purposes.

Therefore, to ensure that the Italian practice is not interpreted as a violation of the spirit and letter of Article 9 of the Switzerland-EU Agreement and to ensure an application of the regulation in line with European Union law, the clarifications made by resolution n. 93/2007 are superseded to the extent that they imply that the partial income tax exemption at the level of the Swiss parent company would hinder the recognition of the benefits of Article 9 of the Agreement, resulting in the application of withholding tax on dividends paid by participating companies resident in the territory of the State.

The current resolution clarifies, therefore, that the partial income tax exemption at the level of the Swiss parent company does not hinder the recognition of the benefits of Article 9 of the aforementioned Agreement.

This resolution is part of a broader process of increased tax collaboration and openness between Switzerland and Italy, as evidenced by the recent removal of the Swiss country from the blacklist concerning individuals (Click here to see the article!)

With the decree of July 20, 2023, issued by the Italian Ministry of Economy and Finance, Switzerland’s exit process from Italy’s latest fiscal Black List, concerning individuals, is finally completed.

The blacklist, established by Italy back in 1999, includes fifty-six countries deemed fiscally privileged for the application of Article 2, paragraph 2-bis of the Italian Income Tax Code (TU).

The significance of this decree stems from two key reasons:

Firstly, it results from Italy’s comprehensive evaluation, leading to the decision to exclude Switzerland from the “blacklist.”

Secondly, it entails practical and operational implications in the realm of taxation once Switzerland is no longer on Italy’s “blacklist.”

Let’s delve into the matter step by step. The inclusion of a country in Italy’s black list requires meeting certain criteria set by the OECD in 1998, which are also acknowledged at the community level. These criteria include the significant absence of corporate income taxes, no obligation for companies to conduct substantial business activities, limited transparency in legislative and administrative systems leading to tax privileges, and the lack of an effective mechanism for exchanging tax information with other countries to combat international tax evasion and avoidance.

The removal of Switzerland from Italy’s “blacklist” signifies a shift in perception. Several factors contribute to this change, such as the evolving international context towards greater integration, the implementation of automatic information exchange among European and non-EU countries, and the increasing prevalence of double taxation avoidance agreements to preserve taxable bases for states.

As a result, Switzerland’s exclusion from the “blacklist” implies viewing the country not only as one without a privileged tax regime but also as a friendly state with which Italy aims to foster communication, collaboration, and continuous monitoring, even in tax matters.

The practical and operational effects of the Italy-Switzerland agreement are considerable. Firstly, the removal of Switzerland from the “blacklist” eliminates the presumption of artificial residency transfers, shifting the burden of proof from taxpayers to tax authorities. Previously, taxpayers had to demonstrate the legitimacy of their residency transfers, sometimes facing significant challenges. However, with the signing of the joint declaration, a more ordinary relationship between taxpayers and tax authorities will prevail, without presumptions in favour of the latter.

Additionally, the agreement renders certain measures inapplicable, such as the “doubling of penalties” for tax monitoring violations and the presumption that investments and financial activities in breach of monitoring rules generate untaxed income. It also affects rules regarding tax reports for taxpayers with residency in blacklisted countries and those governing reports on suspicious transactions.

Furthermore, Switzerland’s removal from Italy’s “blacklist” reduces tax audit timeframes for cross-border activities. Presently, the tax administration has up to ten years for audits, but after the removal, the ordinary deadline of December 31st of the fifth year from the declaration will apply. This constitutes a landmark development in the field of taxation.

The aforementioned forecasts will take effect starting from the fiscal year 2004.

This significant development can, therefore, be highly interesting for Swiss individuals who intend to move to Italy, even using some of the favorable Italian tax schemes.

Countries that account for the 22% of the South America continent have a wealth tax, they are Argentina, Bolivia, Uruguay, Venezuela and Colombia.

		SOUTH AMERICA WEALTH TAXES
COUNTRY	TAX	TAXPAYERS	RATES	TAX BASE
VENEZUELA	Tax on high new worth	Individuals and legal entities	Progressive 1.3% to 3.5 %	Net
URUGUAY	Wealth Tax	Individuals and legal entities	Progressive Non-residents 0.5% to 1,5%   Residents 0.1% to 0.4%	Net
COLOMBIA	Wealth Tax	Individuals	Progressive 0.5% to 1.5%	Net
BOLIVIA	Tax on Large Fortunes	Individuals	Progressive 1.4% to 2.4%	Net
ARGENTINA	Personal Property Tax	Individuals	Progressive Asset in the country: 0.5% to 1.25%   Asset abroad: 0.70% to 2.25%	Asset with some exceptions

The Chilean tax reform project that included the Wealth tax has been rejected by the Parliament, but it may be reproposed by the Government. Meanwhile, in Brazil, the newly elected President Lula has consistently highlighted the introduction of taxation on large fortunes as a top priority.

The increased taxation for wealthy and high-income taxpayers, resulting from various new taxes, is currently leading to a surge in inquiries from Latin America individuals exploring the possibility of changing their tax residence, particularly to the United States or Europe. They are seeking greater stability and asset protection.

A popular solution for high-net-worth individuals (HNWI) from Latin America is to transfer their tax residency to a more favourable jurisdiction (especially one without wealth taxes). One of the favourite gateways to move residency was Spain, because of the lack of language barriers. However, with the introduction of a wealth tax (tax rate between 0.20% and 3,50%), this solution is no longer so convenient.

Italy, on the other hand, represents a highly attractive jurisdiction for a multitude of reasons.

First and foremost, there is no presence of any type of wealth tax, and the political outlook leads us to consider it highly unlikely that one will be instituted in the coming years.

Secondarily, the “Res non Dom” regime can be particularly attractive and competitive for Latin America private clients.

This regime was created by the Italian government with the specific purpose of attracting High Net Worth Individuals who, by choosing to transfer their tax residence to Italy, have not been residents in Italy for at least 9 out of the last 10 years.

Those who opt for this regime are not required to necessarily reside in Italy to be considered fiscally resident.

The main benefit of the “Res Non Dom” regime is the flat tax of 100,000 euros (plus 25,000 euros for each additional family member that one wants to add to the main taxpayer), which applies to all foreign-source income, regardless of the amount. The only exclusion is (for the first five years of the regime’s validity) on capital gains related to qualified shareholdings; however, recently the Italian tax authority allows obtaining an exemption through a specific ruling.

However, there are also other benefits:

• Reporting requirements: Exemption regarding foreign assets and investments;
• IVIE: This tax is due on the value of real estate located abroad and held as property or other real right by individuals residing in the territory of the Italian State, regardless of their use. Individuals benefitting the Res Non-Dom Regime are exempted from the payment of the IVIE.
• IVAFE: This tax is due by Italian residents on financial assets, current accounts and savings accounts held abroad as property or other real right; Individuals benefitting the Res Non-Dom Regime are exempted from the payment of the IVAFE.
• INHERITANCE AND GIFT TAXES: Those who have exercised the option are granted exemption from inheritance and gift taxes for assets and rights held abroad. In case of transfer by inheritance or gift during the period of the substitute tax regime, the inheritance and gift tax will have to be paid only for assets and rights held in Italy. The exemption also applies to the family members who have joined the scheme.

These benefits last for a maximum period of 15 years (however, it is possible to leave Italy before the expiration without the application of any exit tax). Another crucial point is that the regime also extends to offshore structures (trusts, foundations, holdings, etc.) and the assets held by them.

Compared to other jurisdictions, also foreigners who choose the Res Non-Dom Regime are also entitled to obtain the certificate of Italian tax residence. To obtain it, the taxpayer has only to paid the lump sum for at least one tax period (i.e.: if a person joins the Res Non-Dom Regime from 2024, he will be able to request the certificate of tax residence from October 2025, as soon as he has paid the lump sum tax of Euro 100.000)

This certificate has strong evidentiary value against the non-Italian Tax Authorities for the purpose of proving the Italian tax residence of the Res Non Dom individual, as well as for the application of the rules contained in the treaties against double taxation concluded by Italy and avoid problems regarding the double tax residence. This because Italian Res Non-Dom individuals are fully covered by all double taxation treaties entered into by Italy. However, in order to avoid all the possible challenges from foreign tax authorities, it is strongly recommended to have strong ties with Italy.

Italy has bilateral agreements against double taxation in effect with all the nations in the previous scheme, except Bolivia.

These treaties are aligned with the OECD Model, that provide for the transfer of taxing power from the “source state” to the “state of residence”. As stated, the payment of the 100k Euros lump sum tax allows the treaty to be applied. This because the newly Italian tax resident will pay: i) taxes on the foreign source income through the substitute tax of 100k euros; and ii) taxes on the Italian source income through normal Italian taxes.

In conclusion, moving tax residency to Italy will allow the Latin America HNWI to avoid the application of wealth tax in his home country, transferring to a country where not only is such a tax absent, but it will also be possible to pay a fixed tax of 100,000 euros for all income generated abroad. This comes with the added benefit of having a fully applicable and enforceable double taxation treaty even in relation to Latin America tax authorities.

Some numbers

The attractiveness of this regime has been widely demonstrated by the Italian Court of Auditors.

In 2021, approximately 1,000 individuals transferred their tax residence to Italy (with 300 family members), resulting in revenues of 108 million euros for the Italian state. These numbers are more than twice as high as in 2020 and three times as high as in 2019, once again demonstrating that Italy is the ideal place for those who wish to relocate and optimize their tax exposure.

Law no. 232 of 11 December 2016, known as the “2017 Budget Law,” introduced a new reason for entry and long-term residence in Italy, adding Article 26-bis to the Consolidated Act on Immigration (“TUI,” legislative decree 286/1998). This new provision, known as the “Investor Visa for Italy,” was officially named in November 2017.

The Italian Government designed the Investor Visa for Italy as both a reward and an incentive.

The visa is only issued in circumstances that are considered to be of public interest. These circumstances include making a large investment in medium/long-term Government bonds, providing equity financing to an Italian limited company, particularly focusing on new high-tech enterprises (i.e., innovative start-ups referred to in decree-law no. 179/2012), or making a philanthropic donation in key areas for the present and future of Italy, such as culture, research, protection of the environment, and management of migratory flows.

An investor visa can only be issued for a single investment falling into one of the types described below. Combining investments directed to different subjects or different types of investment with a nominal amount below the minimum threshold provided for each of the aforementioned cases is not allowed. Investments made, wholly or partially, before the visa application is submitted by the investor do not qualify for an investor visa.

1. The duration of the permit:

The investor visa is a two-years residence permit, renewable for further three-years, issued to investor visa holders after their arrival in Italy.

2. The conditions for issue and maintenance of the permit:

• The execution of the investment or donation declared in the visa application within three months of the date of entry into Italy.
• The maintenance of the original investment for the entire period of validity of the permit.

3. The type of investments for the issue of the permit:

3.1. Government Bonds issued by the Italian Republic [2 million Euro investment required]:

• Treasury Certificates (CCT/CCTeu)
• Zero-coupon Treasury Bonds (CTZ)
• Long-term Treasury Bonds (BTP)
• Long-Term Treasury Bonds index-linked to Eurozone inflation
• BTP ITALIA.2
• For each type, a minimum residual maturity of no less than two years is required.

3.2. Companies incorporated and operating in Italy [500k Euro investment required]:

• Stakes or shares of limited companies incorporated and resident in Italy pursuant to article 73 of the TUIR (DPR 917/1986).
• A company is considered “operating” (as provided for by Article 26-bis, Article 1, lett. b, TUI) if it is in an active state and has already filed at least one balance sheet at the date of the visa application. The recipient company may be either listed or unlisted. Its name and tax code are substantial and mandatory pieces of information and must be indicated at the time of application.

3.3. Innovative startups [250k Euro Investment required]:

• Stakes or shares in innovative startups, i.e., companies referred to in Article 25, paragraph 2, of decree-law no. 179 of 18 October 2012, converted with amendments by law no. 221 of 17 December 2012 and subsequent amendments.
• The official list of innovative startups, updated every week and accessible free of charge, is available on the portal startup.registroimprese.it, administered by the Italian Chambers of Commerce system.

3.4. Philanthropic donation [1 million Euro investment required]:

• A donation supporting a project of public interest in the fields of culture, education, immigration management, scientific research, or preservation of cultural and natural heritage.

4. The documents for the issue of the permit: The application is deemed complete when it includes the following elements:

• Contact details:
  • Copy of passport.
• Brief curriculum vitae of the applicant’s main academic and professional experience.
• Selection of one of the following three investment types:
  • Investment in Government Bonds.
  • Investment in limited companies, including innovative startups.
  • Donation in the area of preservation of cultural and natural heritage, education and research, or immigration management.
• Documentation in which the applicants demonstrate:
  • The ownership of the sum to be allocated to the investment/donation.
  • The transferability and licit origin of the financial resources used.
  • The absence of final criminal convictions.
  • Description of the characteristics of the investment/donation and proof of consent from the recipients.
• Declaration of commitment to use the funds, validated with an electronic signature, including an indication of the amount that the applicant is willing to invest and the municipality where he/she wishes to settle.

Once the Visa is obtained, the applicant can freely stay in Italy and travel throughout the entire Schengen area.   If desired, they can also apply for residency in Italy, choosing between the following two ALTERNATIVE tax regimes.

1) The 100,000 euro flat tax regime for new residents (“Res Non Dom Regime”)

Individuals who transfer their residency to Italy can benefit from a substitute tax on income produced abroad, by paying a fixed tax of 100,000 euro for each tax period in which the option is valid, regardless of the amount of income received (income produced in Italy by new residents are subject to the ordinary Italian Tax rates)

The regulation is applicable with a specific option for individuals who acquire tax residence in Italy, on condition that they have not been tax residents in Italy for at least nine tax periods during the ten preceding the start of the option’s period of validity and can be extended to family members of the individual with an addition of 25,000 euro for each tax period. Of course, also the family members have to transfer their residence to Italy.

The Res Non Dom Regime is of a temporary nature and ceases after 15 years from the first tax period of effectiveness, without the possibility of renewing.

Further benefits are granted to the main applicant and to the family members to whom the regime is extended:

• Reporting requirements: Exemption regarding foreign assets and investments;
• IVIE: This tax is due on the value of real estate located abroad and held as property or other real right by individuals residing in the territory of the Italian State, regardless of their use. Individuals benefitting the Res Non-Dom Regime are exempted from the payment of the IVIE.
• IVAFE: This tax is due by Italian residents on financial assets, current accounts and savings accounts held abroad as property or other real right; Individuals benefitting the Res Non-Dom Regime are exempted from the payment of the IVAFE.
• INHERITANCE AND GIFT TAXES: Those who have exercised the option are granted exemption from inheritance and gift taxes for assets and rights held abroad. In case of transfer by inheritance or gift during the period of the substitute tax regime, the inheritance and gift tax will have to be paid only for assets and rights held in Italy. The exemption also applies to the family members who have joined the scheme.

2) Inbound workers

Under this tax arrangement, individuals relocating their tax residency to Italy will only be liable for Italian individual income tax on 30% of their income derived from activities performed within Italy. However, if they choose to relocate to one of Italy’s southern regions (Abruzzo, Apulia, Basilicata, Calabria, Campania, Molise, Sardinia, or Sicily), the taxation is further reduced to 10% of the Italian-source taxable income. This substitutive taxation replaces the regular progressive tax rates, which can go up to 43%.

The special tax regime remains in effect for the initial 5 years after the relocation to Italy and to be eligible the following criteria must be met:

• The primary work activity must be carried out predominantly within Italy.
• The individual should not have been a tax resident in Italy for at least 2 years before the relocation.
• The individual must declare their intention to be an Italian tax resident for 2 years from the date of relocation. If they leave before this period expires, the special tax regime will be revoked, and regular taxation will be retroactively applied.
• Moreover, individuals who have at least one underage or dependent child, or those who purchase residential real estate property in Italy within 12 months before or after the relocation (this also applies if the purchase is made by their spouse, partner, or children), can benefit from an extended reduction in the individual income tax base, which lasts from 5 to 10 years.

The special tax regime is generally available regardless of the nature of the individual’s work activity. However, there is one exception: professional athletes relocating to Italy, for whom the reduction in the individual income tax base is limited to 50%, regardless of the specific Italian region of relocation. These professional athletes are subject to certain limitations if they wish to extend the special tax regime for an additional 5-year period.

Italy’s characteristics are universally known: member country of the G7/G20, founder country of the European Union, one of the top healthcare systems worldwide and a way of living (food, artistic heritage, lifestyle) that is out of raking charts.

In addition, Italy has also become a very attractive country with reference to Visas.

This is also thanks to new facilitation schemes that minimise the tax burden i.e.:

i) “New tax Resident” regime with a yearly flat tax of €100k on foreign income and capital gains; and

ii) «Inbound workers» regimein which the income generated in Italy from employment and self-employment is partially exempt from Italian income tax as follows: (90% exemption if the individual moves his/her residence to the southern regions of Italy, 70% exemption in all the other cases).

This article is compiled in order to explain the procedure and requirements to obtain a residence permit as a self-employed person in order to stay in Italy and move freely within the EU territory through the Schengen Visa.

Once obtained the Visa, it is possible (if all the requirements are present) the most suitable tax regime from among those mentioned above (“New tax resident” or “Inbound workers”).

Procedure:

• The foreign applicant must go to a foreign Notary Public to have the power of attorney conferred on procurator who will act in his name and on his behalf in Italy apostilled;
• After the power of attorney has been conferred, the activity is fully carried out by the attorney, who will go to the competent Chamber of Commerce in order to apply for the issuance of the authorization, which must be produced at the Ministry Office (“Questura”);
• Once the clearance is obtained, a contract for the lease or purchase of a property will be concluded, which must necessarily be located in the place where the foreign applicant will carry out his or her professional activity as a self-employed person. At the first stage, for the purpose of the issuance of the residence permit by Questura, a declaration by the owner of the property stating that he/she will lease or sell said property in favour of the foreign applicant will be sufficient;
• Having collected in full the documentation required by current regulations, the attorney will go to the relevant Questura for the purpose of issuing a residence permit. The validity of this permit will be 90 days. Within that period, the applicant has to go to the Italian embassy in the country of residence in order to apply for the issuance of a visa with a validity of 2 years (renewable upon expiration).

Requirements:

i. The applicant must carry out an activity in Italy as a self-employed person (including through sole proprietorship, opening of simple or capital company);

ii. The applicant must be in possession of a clearance issued by the Chamber of Commerce;

iii. The applicant must have received an income of more than € 8,500.00 gross in the year preceding the visa application;

iv. The applicant must be in possession of a contract for the lease or purchase of a property for residential use;

v. The applicant must be in possession of health insurance;

vi. The applicant must be in possession of a residence permit issued by the relevant ministry office.

In conclusion, the procedure can be carried out relatively quickly and with very competitive costs (especially when compared to other European states). The possibility of opting (after obtaining the visa) for one of the favourable tax regimes described above makes Italy an even more attractive country.

For example: On an IRPEF taxable income of EUR 100,000, the average standard rate would be 35.9%. Taking advantage of the exemption for ‘Inbound Workers‘ this would become:

• about 4% in case of residence in southern Italy
• about 11% in the case of residence in other Italian regions

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

The trust as an ideal legal instrument to preserve the family tradition of a historic company, respecting the founder’s wishes and ensuring an orderly generational passage.

With exactly this aim in mind, Piero Ferrari, son of the founder Enzo and second shareholder (10%) of the historic Maranello’s brand, decided to set up a trust to manage his shareholding in Ferrari.

A trust – essentially a family trust and intended to regulate the succession (as defined most recently by Circular 34/E/2022) – with Jersey governing law and designated beneficiaries the settlor’s daughter and two grandchildren, one of whom was appointed as Trustee.

The settlor has therefore transferred to the trust fund the bare ownership of his shares (with an approximate market value of €4 billion) with the express provision that 80% of the dividends produced by such shares will be reserved to him, while the remaining 20% will be allocated to the trust.

Precisely in order to ensure as orderly a generational transition as possible and in line with the founder Enzo Ferrari’s wish to keep part of the company ‘in the family’, it has been stipulated that it will be impossible to dispose of the shares even in the event of inheritance disputes.

Even more so, if possible, the trust proves to be a suitable instrument for the management and preservation of assets also with a view to inheritance and generational transition, with a truly reduced initial tax impact (in fact, only the registration tax in a fixed amount of €200.00 will be charged at the time of the transfer of assets) in full compliance with civil and tax regulations, as most recently set forth in Circular 34/E/2022 of the Italian Revenue Agency.

Our firm is at the forefront of these types of transactions and ready to assist you with any information you may need on trusts and asset and corporate restructuring in general.

Abstract: Asstes of third parties controlled (de facto or de jure) by the respondent are commonly outside the scope of a freezing injunction unless exceptional circumstances.

In the case of FM Capital Partners Ltd v Frédéric Marino, Aurélien Bessot, Yoshiki Ohmura, and Marit Sjovaag [2018] EWHC 2889 (Comm), the English High Court held that if a company wholly owned or controlled by the respondent is a non-trading company without an active business, and the respondent deals with or disposes of that company’s assets outside the ordinary course of business, that conduct may be enjoined by the terms of a freezing injunction.
In this exceptional circumstances the third party’s assets can be within the scope of the freezing injuction.
In all other circumstances, the proper course of conduct is for an application to be made to join the third party as a respondent to the order itself.

Facts

A Worldwide Freezing Order was granted in July 2018 following the High Court’s judgment against Mr Ohmura (the Respondent) for dishonest assistance in acts of bribery and breaches of fiduciary duty by the First Defendant.
This WFO, prohibited the Respondent from disposing of, diminishing in value, or otherwise dealing with his assets up to a value of US$ 11,250,000.

On 9 October 2018, Peter McDonald Eggars QC had dismissed an application by Mr Ohmura for the discharge of that freezing order.
The claimant in the action also applied for an order for further disclosure in respect of Mr Ohmura’s assets, and also a variation of the freezing order to reduce the values of transactions which required notification.
Mr Ohmura’s application was that the freezing order should not attach to the assets of several companies.

For the most of the assets, Mr Ohmura had 100% direct or indirect shareholding and was a director along with his sister. and he underlined that the companies’ assets belonged to and were in the control of third parties and not his self.
The claimant argued that the companies’ assets were covered by the freezing order indirectly because if a company decreases it assets it reduced the value of Mr Ohmura’s shareholding in that company.

On deciding the point, the judge discussed the cases of Lakatamia Shipping Co Ltd v Su, Group Seven Ltd v Alive Investment Corporation Limited and JSC BTA Bank v Ablyazov. H
e quoted Lord Clarke from the Supreme Court Ablyazov decision:

“The extended definition of assets in the standard form of freezing order captured assets which are not owned legally or beneficially by the respondent, but over which the respondent has control and has the power to dispose of or deal with as if he or she did. In other words the extended definition expands the ordinary meaning of assets.”

It was the judge’s view that the extended definition did not apply to assets over which the respondent has control, but which the respondent does not legally or beneficially own.

He therefore found that the freezing order did not apply to the assets of the companies in which Mr Ohmura had a direct or indirect shareholding. Mr Ohmura also argued successfully that other variations should be made to the freezing order, including a curtailment of the clause referring to him having an interest in assets legally, beneficially or otherwise. This is because there was no evidence that Mr Ohmura owned any assets as a trustee nominee or any other basis other than as the legal or beneficial owner.

The judge also gave the claimant some satisfaction. In relation to notification of the sale of assets from the companies owned by Mr Ohmura, the claimant had to be notified of any dealing or disposal of assets.
The claimant sought an order for further disclosure of information relating to:

• All transfers of more than a specified limit made from Mr Ohmura and two bank accounts belonging to his companies since 2015.
• Details of the turnover and profit made by the companies.
• Other information that had been requested in inter partes correspondence.

The judge allowed the order for further disclosure with the following reasons:

• He had already decided there was a real risk of dissipation of assets.
• There was an obvious discrepancy between the funds and assets which were at one time held by Mr Ohmura and the assets actually disclosed by him.
• Mr Ohmura did not originally comply with the disclosure order made in the worldwide freezing order dated September 2018.

Such an order was justified in order to identify not only what assets were held by Mr Ohmura, but what has become of any assets which he may have dissipated.

The disclosure was not burdensome and could be provided without substantial expense.

Conclusions:

This case judgment’s  confirmed that third-party assets will remain outside the scope of such a freezing injunction unless:

• the respondent can be held to have a legal/beneficial interest in the assets and
• exceptional circumstances can be established, or
• the third party in question is named as a co-respondent to the freezing injunction.

For any further information about worldwide freezing order, contact us: info@slceurope.net

In the Zhang and Ji v DBS Trustee case, the Hong Kong Court of Final Appeal (CFA) established that so-called “anti-Bartlett clauses” in the trust deed of a Jersey family trust exempted the trustees from any liability for losses incurred in transactions by the trust’s underlying investment company.

Reversing the decisions of Hong Kong’s Court of Appeal and lower courts, the CFA ruled that the anti-Bartlett clause contained in the trust deed effectively excluded any “high level supervisory duty” with any purported residual obligation on the part of the trustee in relation to the losses caused by risky investment decisions made on behalf of the trust’s underlying investment company unless they became aware of actual dishonesty.

EVENTS:
During the 2008 financial crisis, Madame Ji Zhengrong (an expert in financial investment) and her husband Zhang Hong Li, settled up a trust.
The couple also created an offshore company called Wise Lords.
The Wise Lords company was owned by the trust to make high risk investments during the bubble, prior the 2008 crisis.

When the crash came, the company suffered a large amount of losses.
The spouses (beneficiaries of the trust), together with the succesor trustee and the Wise Lords company itself sued DBS Trustee HK (the former trustee) and its corporate director for breach of trust.

The court of first instance finded that the trustee had been in “serious and flagrant breach” and had breached its “high level of supervisory duty” by allowing the Wise Lord Company to buy financial products with high risk.
This ruling was confirmed by the Hong Kong Court of Appeal, despite the presence of an anti-Bartlett clause, which is normally used to exempt the trustees from any liability.

Reversing the decisions of Hong Kong’s Court of Appeal and lower courts, the CFA unanimously found that the trustees had no ‘high level residual duty’ to supervise the company’s activities, given that the anti-Bartlett provisions relieved them from any duty to interfere with or supervise the company’s conduct, unless they became aware of actual dishonesty.
Furthermore such a duty would require DBS Trustee to query and disapprove of the risky transactions, which would be interfering with Wise Lords’ business, contrary to the terms of the trust deed.

CONCLUSIONS:
This is an important decision (and rare high level decision on this issue) which may reassure private wealth and trusts practitioners of the strength and scope of anti-Bartlett clauses”

The governing law of the trust was Jersey law. The principles will therefore likely be applicable in most of the major common law trust jurisdictions.

In conclusion, it is always recommended to be aware of the presence of Anti Bartlett Clause in trust deeds, in order to not become involved in the underlying business of companies held in the trust save where they detect dishonest activities.

On 19 March 2020 the English Court of Appeal determined that English courts do have jurisdiction under s44(2)(a) of the English Arbitration Act (“the Act”) to issue an order compelling a non-party to an arbitration agreement to give evidence in support of arbitration proceedings seated both inside and outside England and Wales, overturning the High Court judgment.

The First Instance Decision

The court acknowledged that the wording of s44 of the Act might suggest that s44(2)(a) could apply to give the court the power to issue an order compelling a non-party to give evidence in support of a foreign seated arbitration.
However, given the decisions in earlier cases on s44, this was not a simple question.

The Commercial Court referred extensively to the decisions in Cruz City Mauritius Holdings v Unitech Limited [2014] EWHC 3704 (Comm) (“Cruz City”) and DTEK Trading SA v Morozov [2017] EWHC 1704 (Comm) (“DTEK”). In light of these authorities, the Court determined that s44(2)(a) was confined to parties to the arbitration agreement.

This, due to the following reasons:

• s44 was stated to be subject to contrary agreement between the parties;
• a number of other subsections pointed towards an intra-parties interpretation of s44 as a whole (such as subsections (4), (5), (6), and (7));
• if Parliament had intended to permit the court to make third party orders in support of arbitrations around the world, it would have expressly said so in the Act; and
• a difference in treatment between different subsections of s44 was unattractive without a difference in language.

Overruling the First Instance Decision, the Court of Appeal unanimously found that English courts do have jurisdiction under s44(2)(a) to compel a non-party to give evidence in support of an arbitration.

Lord Justice Flaux found that the wording of section 44(1) when read with section 2(3) and the definition of “legal proceedings” in section 82(1) makes it clear that provided the other limitations built into the section are met, the English Court has the same power under s44(2)(a) in relation to arbitrations as it has in relation to civil proceedings before the High Court. There was no justification for limiting the subsection to domestic arbitrations.

Ms Welsh, counsel of the non party, submitted that if the party has the power to make an order agains a non-party under s44(2)(a), it is anormal that there is a limitation in s44(7) on the non-party rights of appeal.
The court found that there was force in Ms Welsh’s submission, however the Court found that the anomaly was not enough to justify the restrictive approach.

This leads to the anomalous situation where the English Court’s powers to order a witness to give evidence in support of arbitration are wider than those in respect of foreing court proceedings where it cannot make a similar order unless there is an inwards letter of request.

This power will be a very important tool for the English Court in order to support domestic and foreign arbitrations.

In conclusion parties should ensure that the scope of their proposed order is narrow, confining the topics on which they seek evidence from a non-party to the issues actually in dispute in the arbitration.

In considerazione dell’evoluzione della pandemia da COVID-19 sul territorio nazionale, sono state, tempo per tempo, adottate da parte del Governo Italiano svariate misure, per far fronte all’emergenza sanitaria grave ed eccezionale (si considerino: D.L.  23/02/2020, n. 6 “Misure urgenti in materia di contenimento e gestione dell’emergenza epidemiologica da COVID-19”, D.P.C.M. 25/02/2020 “Ulteriori disposizioni attuative del decreto legge 23 febbraio 2020, n. 6, recante misure urgenti in materia di contenimento e gestione dell’emergenza epidemiologica da COVID-19”, D.P.C.M. 1/03/2020 “Ulteriori misure urgenti in materia di contenimento e gestione dell’emergenza epidemiologica da COVID-19”, ora sostituito dal D.P.C.M. 8/03/2020 (cfr. art. 5 comma 3), D.P.C.M. 4/03/2020 “Misure per il contrasto e il contenimento sull’intero territorio nazionale del diffondersi del virus COVID-19 ”, ora sostituito dal D.P.C.M. 8/03 2020 (cfr. art. 5 comma 3), D.P.C.M. 8/04/2020 “Ulteriori disposizioni attuative del decreto-legge 23 febbraio 2020, n. 6, recante misure urgenti in materia di contenimento e gestione dell’emergenza epidemiologica da COVID-19”, D.P.C.M. 9/03/2020 “Ulteriori disposizioni attuative del decreto-legge 23 febbraio 2020, n. 6, recante misure urgenti in materia di contenimento e gestione dell’emergenza epidemiologica da COVID-19, applicabili sull’intero territorio nazionale”, D.P.C.M. 11/03/2020 “Ulteriori disposizioni attuative del decreto-legge 23 febbraio 2020, n. 6, recante misure urgenti in materia di contenimento e gestione dell’emergenza epidemiologica da COVID-19, applicabili sull’intero territorio nazionale”, D.L. 17/03/2020 n. 18 (“Misure di potenziamento del Servizio sanitario nazionale e di sostegno economico per famiglie, lavoratori e imprese connesse all’emergenza epidemiologica da COVID-19”, c.d. Decreto “Cura Italia”), D.P.C.M. 22/03/2020 “Ulteriori disposizioni attuative del decreto-legge 23 febbraio 2020, n. 6, recante misure urgenti in materia di contenimento e gestione dell’emergenza epidemiologica da COVID-19, applicabili sull’intero territorio nazionale”, D.M. Sviluppo Economico 25/03/2020 contenente modifiche all’Allegato 1 del Decreto del Presidente del Consiglio dei Ministri del 22 marzo 2020, D.L. 25/03/2020, n. 19 “Misure urgenti per fronteggiare l’emergenza epidemiologica da COVID-19”, D.L. 8/04/2020 n. 23 “Misure urgenti in materia di accesso al credito e di adempimenti fiscali per le imprese, di poteri speciali nei settori strategici, nonché interventi in materia di salute e lavoro, di proroga di termini amministrativi e processuali.”).

Tali misure hanno introdotto, in via progressiva, limitazioni alla libertà di circolazione di persone e merci, oltre che all’esercizio delle attività produttive, industriali, commerciali e di consulenza. Le predette attività, in grossa parte, sono state del tutto sospese. Come conseguenza di ciò, vi sono imprese che potrebbero non essere più in condizione di adempiere alle obbligazioni contrattuali assunte o, comunque, a farlo secondo le modalità ed i termini indicati in contratto. Parallelamente, coloro che devono ricevere le prestazioni (imprese/persone fisiche) potrebbero non essere più in grado di utilizzarle o potrebbero doverle rifiutare, invocando una sopravvenuta carenza di interesse in ragione della situazione emergenziale in atto.

Ci si pone quindi nella necessità di comprendere quali conseguenze applicative le precitate  restrizioni possano spiegare sui rapporti contrattuali in essere, in particolare sotto il profilo dell’inadempimento contrattuale.
Occorre considerare che, in termini generali, l’inadempimento contrattuale (art. 1218 c.c.) origina dalla totale o parziale inesecuzione della prestazione contrattuale, per causa imputabile al debitore (ovvero della parte contrattuale che quella prestazione doveva porla in essere). All’inadempimento imputabile, segue – salvo quanto in appresso indicato – la responsabilità del debitore.

Il Decreto Cura Italia (Decreto Legge n. 18 del 17 marzo 2020 art. 91) ha chiarito in proposito  che: “il rispetto delle misure di contenimento … è sempre valutato ai fini dell’esclusione, ai sensi e per gli effetti degli articoli 1218 e 1223 c.c., della responsabilità del debitore, anche relativamente all’applicazione di eventuali decadenze o penali connesse a ritardati o omessi adempimenti”.  Dalla lettura del riferimento normativo – in questo momento di emergenza e per la durata e proroga dei provvedimenti normativi emanati ed in via di emanazione – discende la non imputabilità dell’inadempimento contrattuale (dovuto a ritardi o omissioni) e, per l’effetto:

1. Il debitore può, dunque, per espressa previsione di legge, invocare a scusante del proprio inadempimento, il rispetto delle misure di contenimento;
2. il creditore (ovvero il soggetto che la prestazione doveva riceverla) non può legittimamente far valere penali e/o decadenze.

Inoltre, la situazione emergenziale in essere ed il rispetto dei provvedimenti emanati dal Governo può dare corso:

• ad ipotesi di impossibilità sopravvenuta della prestazione (la prestazione prima era possibile, poi, in ragione del quadro di emergenza, diventa impossibile – parzialmente o totalmente – perché adempierla vorrebbe dire violare gli ordini o i divieti emanati dall’autorità). In merito, si richiama l’art. 1256 c.c. che disciplina le ipotesi di impossibilità definitiva e temporanea della prestazione. L’obbligazione contrattuale si estingue quando, per una causa non imputabile al debitore, la prestazione diventa impossibile. Se invece l’impossibilità è solo temporanea, il debitore non è responsabile del ritardo nell’adempimento finché essa perdura. Tuttavia l’obbligazione si estingue se l’impossibilità perdura fino a quando, in relazione al titolo della obbligazione o alla natura dell’oggetto, il debitore non può essere ritenuto obbligato a eseguire la prestazione ovvero il creditore non ha più interesse a conseguirla;
• ad ipotesi in cui la prestazione diventa eccessivamente onerosa (perché: i. si crea uno squilibrio tra le prestazioni contrattuali, tale per cui una diventa troppo gravosa rispetto all’altra squilibrio, e ii. l’eccessiva onerosità sopravvenuta deve essere riconducibile ad eventi straordinari ed imprevedibili). L’art. 1467 c.c., in tema di contratti con prestazioni corrispettive (ovvero in cui entrambe le parti devono eseguire una prestazione l’una verso l’altra), prescrive che se la prestazione di una delle parti è divenuta eccessivamente onerosa per il verificarsi di avvenimenti straordinari e imprevedibili, la parte che deve tale prestazione può domandare la risoluzione del contratto. La risoluzione non può essere domandata se la sopravvenuta onerosità rientra nell’alea normale del contratto. La parte contro la quale è domandata la risoluzione può evitarla offrendo di modificare equamente le condizioni del contratto.

In via di derivazione, trattandosi di misure imposte per far fronte ad una epidemia / pandemia, ciò può altresì configurare ipotesi di forza maggiore. Questa fattispecie (la forza maggiore) non ha una precisa normazione codicistica. In altre parole, non vi è una legge italiana che traccia le linee di cosa sia la forza maggiore. La medesima infatti è di matrice internazionale, ove è prassi inserire nella contrattazione clausole che gestiscano la responsabilità da inadempimento, rispetto a guerre, pandemie ed altre ipotesi di eventi catastrofici, imprevedibili e non riconducibili alla volontà dei contraenti. Queste clausole consentono di eliminare ogni forma di responsabilità. La giurisprudenza italiana ne recepisce gli effetti, attraverso il ricorso al disposto di cui all’art. 1467 c.c. (già sopra menzionato). Detta disposizione riconosce al debitore la facoltà di richiedere la risoluzione del contratto nel momento in cui la prestazione da lui dovuta sia diventata eccessivamente onerosa per fatti straordinari ed imprevedibili, estranei alla sua sfera d’azione.

A livello di contrattualistica internazionale, oltre alle già citate clausole di forza maggiore, si rammentano:

• La Convenzione di Vienna relativa alla vendita internazionale di beni mobili che all’art. 79 recita espressamente così: “Una parte non è responsabile dell’inadempienza di uno qualsiasi dei suoi obblighi se prova che tale inadempienza è dovuta ad un impedimento indipendente dalla sua volontà e che non ci si poteva ragionevolmente attendere che essa lo prendesse in considerazione al momento della conclusione del contratto, che lo prevedesse o lo superasse, o che ne prevedesse o ne superasse le conseguenze”.
• La clausola standard di forza maggiore utilizzabile dagli operatori nella stipulazione dei contratti, con una dicitura specifica “ICC Force Majeure Clause 2003” redatta dalla Camera di Commercio Internazionale.

Ancora, considerando la rilevanza globale dell’emergenza sanitaria in corso, con circolare del 25 marzo 2020, il Ministero dello Sviluppo Economico ha autorizzato le Camere di Commercio a “rilasciare dichiarazioni in lingua inglese sullo stato di emergenza in Italia conseguente all’epidemia da COVID-19”. Dette attestazioni rispondono alla necessità di  agevolare la prova della forza maggiore nello straordinario contesto emergenziale, mettendo al riparo le imprese inadempienti da responsabilità alle stesse non imputabili.

Conclusioni

In conclusione, nell’affrontare le conseguenze derivanti dall’emergenza, rispetto agli obblighi contrattuali, per un verso, si osserva come il Governo Italiano abbia chiarito che l’osservanza delle restrizioni emanate non dà corso ad inadempimenti contrattuali imputabili (quindi fonti di responsabilità contrattuale).

Per altro verso, si osserva come la pandemia determinata da Covid-19 sia idonea a giustificare ipotesi di inadempimento di obbligazioni contrattuali precedentemente assunte, quando ciò è causa di impossibilità (definitiva o temporanea) dell’esecuzione della prestazione o quando la prestazione di una parte contrattuale diventa eccessivamente onerosa. Va da sé che le conseguenze saranno diverse sia nell’uno che nell’altro caso