A group of first time directors, known as Gruppo 16/12,who took legal action against the Italian government after being denied publicfunds that had been awarded to their projects, have won their case.

Earlier this year, the government told the directors there were insufficientfunds to finance their 20 features which had been awarded public funds by theCultural Ministry in December 2003. Filmmakers were invited to reapply forfunding this year.

Producers of theemerging writers and directors took legal action to freeze the Ministry's fundsuntil their situation was resolved.

While theCultural Ministry may still appeal the verdict, Gruppo 16/12 announced it had"won half the war so far."

"Theverdict has just come out and it is favourable to us all the way, declaringillegitimate all the work done by the Ministry concerning our films: it makesit clear that we should have been given the money to make our films there andthen and that there's no other way about it," said Fabiomassimo Lozzi, afirst-time director who founded Gruppo 16/12.

The Italian filmindustry has been in crisis over the last two years as Silvio Berlusconi'sgovernment systematically slashed cinema funds, and producers waited for thegovernment's new Urbani cinema law to be passed.

The crisis isexpected to lead to a 70% drop in local film production in 2005, with Italyproducing only 28 films, down from the 95 pictures that were made in 2003.

Furtherdeepening the crisis, the Constitutional Court recently said that some of thedecrees in the Urbani law were "unconstitutional." API, Italy'sindependent producers and writers association, has warned that the sentencewould lead to a "total block" of the entire Italian film industry."It could inflict a mortal blow to Italian cinema," API said.

In the meantime,the Venice Film Festival will screen a collective film by Gruppo 16/12 focusingon the government's protracted funding delay. The collection of 8 short films,entitled Cinema Paradox, will screen in the Venice Directors' Fortnight.