The increased need to strengthen the security of employees and contractors in geographic areas with elements of risk

Treating the topic of insurability of the risks associated with sending one’s employees abroad, in addition to and beyond the usual policies from which the expatriate can benefit (regarding accidents, illnesses, surgeries, muggings, etc.........) it is necessary to mention the so-called “Legal Risk Insurance” and the so-called “Kidnap and Ransom” policy.

In the first case, the Italian Entità may well legitimately take out policies with companies that specialize in this type of insurance sector, in order to mitigate the risk of incurring substantial legal expenses in the face of events that may involve the expatriate abroad (e.g., for violating rules of conduct, religious norms, and so on). But the “legal risk” policy can also cover the legal expenses to be incurred in the event of kidnapping or abduction of the transferee, as this type of policy certainly does not conflict with L. 82/1991, which will be returned to in the next paragraph.

Attending now to the issue of the possibility that an Italian Entità take out an insurance policy specifically to deal with the risk of a kidnapping/kidnapping (hypotheses that are not only frequent, but in so many geographical scenarios are of worrying actuality), it should be premised that there is no organic regulation at the international level about the payment of ransoms. In fact, each State regulates the matter differently, to the point that some Orders even provide for the existence of a crime hypothesis in taking out such a policy, as it is considered an incentive to crime, while in other Orders è allowed, albeit with some limitations.

The only exception, whose discipline è shared by the International Orders, concerns the prohibition of ransom payments to terrorist organizations, which is expressly prohibited by the International Organizations competent to dictate global principles in the repression of terrorism, and therefore of its sources of financing (e.g. OSCE, United Nations Security Council, Financial Action Task Force, Council of the European Union etc.....)

In our legal system, kidnapping is not è insurable, as this type of contract is è expressly prohibited by Decree Law No. 8 of January 15, 1991 "New rules on kidnapping for extortion", converted, with amendments, into Law No. 82 of March 15, 1991. 82, which prohibits the “stipulation even abroad of insurance contracts having as their object the coverage of the risk, in the territory of the State, represented by the payment of the ransom price in case of kidnapping for extortion, one's own or other persons”.

The same Law also decreed the freezing of the assets of the kidnapped person, the family and, at the discretion of the’Judicial Authority, also any other person who might be willing to pay the ransom.

In light of this legislation, the possible conclusion of a so-called policy. “Kidnap and Ransom (K&R)”, in Italy could never assume effectiveness and therefore legal value, nè should the policy be stipulated with a national company nè in case the policy is stipulated with a foreign company, should it have as its object, even if comprehensively with coverage of other risks, insurance against the risk of kidnapping in the territory of the State.

More precisely, we would be dealing with the hypothesis of absolute nullity of the insurance contract, since it is contrary to a mandatory norm, which certainly è L. Nr. 82 above-mentioned, pursuant to the combined provisions of articles 1343 and 1418 cod.civ.

However, the regulation under comment, given its literal tenor, lends itself to a number of perplexities and reflections, the first of which concerns the case in which the risk hypothesis pertains solely and exclusively to events that were to occur outside the territory of the Italian State and that the insurer is foreign, without any representation or offices in the national territory, and that the insurance contract is governed by a foreign law.

In this case, should the prohibition imposed by Law No. 82 still be deemed applicable? In the opinion of the writer, the answer must be in the affirmative, given that any subject of Italian nationality residing in Italy è is subject to the law and must particularly comply with the rules of public policy, since they are in the nature of rules of “necessary application” that is, always and in any case applicable, even in cases where the relationship is governed by a foreign law or an international convention.

Unfortunately, the Government and Parliament of the time omitted to expressly qualify the above-mentioned law as a law “of necessary application”, commonly and traditionally meaning, by this expression, those laws deemed inalienable by the national legal system by reason of their object or purpose, and the application of which cannot be excluded, in order to guarantee the protection of imperative interests.

It should also be said that - as a rule - State Orders require that their own rules of “necessary application” prevail over foreign rules applicable to the relationship, based on their own private international law. These rules must therefore always be applied by the court, even in cases where the dispute involves matters governed by foreign law. In relatively recent times, a definition of the concept of “necessary application” è was provided by the European Union Regulation so called “Rome I” (EC Regulation No. 593/2008) on the law applicable to contractual obligations. More precisely, Art. 9) of the aforementioned “Rome I” Regulation defines the rules of “necessary application” as the “provisions whose observance èis deemed crucial by a country for the safeguarding of its public interests, such as its political, social or economic organization, to such an extent as to require their application to all situations falling within their scope, whatever the law applicable to the contract under this Regulation”.

Not only that: since the aforementioned law pertains to the field of criminal law, we know that the Italian citizen è obliged to comply also abroad with the laws established by our State, so as established by art. 7 of the Criminal Code, which reads:” .........è punished according to Italian law the citizen or foreigner who commits in foreign territory any of the following crimes.............”.

Given that the issue è is controversial, and that the text of Law 82/1991 may be interpreted differently, in the opinion of the writer è it is inadvisable for an Italian Entità to take out an insurance policy abroad with a foreign insurance company, for the reasons stated above.

Moreover, this fear is further confirmed even at the level of civil law, if one examines the Regulation of the European Union (EC Regulation No. 864/2007 , otherwise known as the “Rome II” Regulation) which regulates the identification of the applicable law in case of conflict of laws in non-contractual obligations in civil and commercial matters. We refer to “Art. 16) of the “Rome II” Regulation, which provides “shall not affect the application of the provisions of the law of the forum which are of necessary application to the situation, whatever law is applicable to the non-contractual obligation”. It is quite clear, therefore, that Article 16) of the Rules provides that the provisions of the law of the forum that are of necessary application, to the situation, shall always apply, regardless and irrespective of which law is applicable to the non-contractual obligation.

And certainly, the Italian Judicial Authority, including civil (and therefore not only the criminal one) would have jurisdiction under the jurisdictional profile to hear the eventual case underlying a kidnapping/seizure of an Italian citizen abroad, transferring an Italian Entità although the insurance contract has been stipulated with a foreign insurance company and that such contract is subject to the law of a foreign country.

On the other hand, it is reasonable to consider as fully valid the insurance policy contracted with a foreign insurance company by a company or located abroad, but wholly owned or controlled by an Italian Entità or by a branch, albeit with the limitations and reservations set forth below, if they send to another country their own employees, whether of Italian nationality or not, provided, of course, that they are not direct employees of the Italian parent company.

More exactly, let's examine the various hypotheses: where it is a branch endowed with full organizational autonomy and freedom of decision-making (although it is not legally autonomous) the stipulation of an “K&R” risk insurance policy with a foreign insurance company does not violate Italian law in any way, and must therefore be considered fully legitimate. Obviously, if the branch lacks this autonomy, the stipulation of such a policy, imposed or “suggested” by the Italian Entità would go in violation of the oft-mentioned principles, and would therefore be illegal.

Where we are dealing with a subsidiary, i.e., a company located abroad, controlled or wholly owned by an Italian Entità, we must necessarily investigate its governance model and therefore the actual ability, on the part of the parent entity, to influence or even determine the operational decisions of the subsidiary (in other words, in the same way as for the branch, it is a matter of assessing the actual autonomy of the Administrative Body of the subsidiary company).

In addition, it is pointed out that, for their protection, foreign insurance companies are in the habit of providing, in insurance against “K&R” risk, a safeguard clause, in the event that the policy becomes the subject of sanctions or restrictions issued by a state or ordered by an’international authority, under which the policy itself would become inoperative.

Most important countries in which “K&R” policies are considered legitimate include the United Kingdom and the United States; in these countries, the insured risk can also be extended to others who may accompany the worker, such as family members or cohabitants.

The’insurance thus stipulated protects the’Employing Company and the expatriate from the losses caused by the seizure, covering not only the price paid by way of redemption, but also a whole series of additional damages such as, purely by way of example,the damage caused by the’business interruption, damage to’image, the value of the things handed over as ransom, the expenses of consultants and/or negotiators hired in agreement with the insurers and the expenses for the repatriation of hostages, etc...... It’s important to note that, usually, “K&R” policies do not provide for ’operability; in cases where the kidnapping/kidnapping has a terrorist matrix.