EXPORTING TO ITALY: Which are the rules governing a contract for supply of goods, and what is the relevant Limitation Period for possible actions before an Italian court?
In the recent decades, the rules governing international sales have been the object of an important movement toward unification. This is mainly the result of an increasing wider adoption of CISG, the 1980 uniform convention on international Sale of Goods – adopted in April 1980 under the aegis of the United Nations, and entered into force in December 1988, CISG now gathers some 94 contracting States including Italy – and relevant caselaw.
Now CISG rules represent a well-established standard, governing the core of sale cross-border transaction, even though it is still far from being the standard. In fact, sectors traditionally influenced by the different traditions, namely the English law appear still hostile to the adoption of the CISG rules. Moreover, CISG does not cover all the issues relating to a sale transaction. Apart some exclusion in re type of goods (e.g. electricity) and relationship (e.g. mixed contracts for sale and services where the latter are predominant) there are more general matters that have been excluded from the Convention scope (namely those relating to the validity of the contact, or its effect on the property of the sold goods).
Also impliedly excluded are to be considered the issues relating to the limitation period (i.e. the period of time within which a party under a contract for the international sale of goods must commence legal proceedings against another party to assert a claim arising from the contract or relating to its breach, termination or validity). An UN convention was made on the subject in 1974, and amended in 1980 on occasion of the adoption of CISG.
Italy was one of the first States where CISG originally came into force in 1988. No reservation was made. As a result, CISG is going to be applied by an Italian court to issues involving an Italy-based buyer of seller whereas (i) the counterpart is based in one of the other contracting States, or (ii) the Italian laws are to govern the sale contract, in accordance with the applicable rule of conflict (namely when they are expressly chosen as applicable, or they may be deemed applicable in the silence of the parties). In other words, there’s no need to expressly recall CISG, to have it applied, because CISG is considered as incorporated into the Italian laws, and can be exclude from them by means of an express indication only.
So far, some eighty judicial decisions directly concerning CISG application and interpretation have been reportedly made by Italian courts at both lower and higher (Cassation) level. Said caselaw reveals an appreciable level of understanding of the CISG rules and rationale, and a clear willingness to aligning with international standards: Italian caselaw often recalls foreign leading cases, and scholars’ opinions. In conclusion, an exporter from other jurisdictions is likely to find Italian courts definitely open, and competent to comply with international criteria of CISG interpretation.
As for the limitation period, the situation is definitely different. In fact, Italy is still not a contracting State of either the 1974 New York convention, and the relevant 1980 Protocol, setting a 4-year general limitation term. Said Protocol, in particular, was conceived as a sister instrument to the CISG. It failed to share the same fortune, though, having been adopted by just 23 States so far (Italy excluded). The situation is furthermore complicated as a result of the interplay between the original 1974 Convention and the 1980 Protocol (for instance, some country, such as the USA have made a reservation limiting applicability of the Convention on reciprocity, i.e. where both parties have their place of business in contacting States).
As a result, limitation issues are to be assessed by Italian courts under the applicable domestic laws (as identified as applicable from time to time, in accordance with the court’s rules on conflicts of laws) rather than with a uniform set of international rules. This situation, of course, may lead to surprisingly different outcomes, being limitation period treated differently in various jurisdictions.
As far as international sales transactions are concerned, the Italian rules on conflicts of laws are basically those contained in The Hague 1955 convention, a treaty entered into force many years ago and now binding no more than nine countries (Belgium, Denmark, Finland, France, Italy, Niger, Sweden, and Switzerland). Pursuant to said convention, the (domestic) laws to be applied to a sale contract, in case the parties have not provided for it, are the laws of the country “in which the vendor has his habitual residence at the time when he receives the [purchase] order” unless said order “is received in the buyer’s country by a seller’s representative, agent or commercial traveller” (in this later occurrence, the buyer’s country laws are to apply).
The above descripted elements may be utilized to create a matrix of possible cases (this is just plain theory; things may change a lot in practice on account of factual details). Just limiting to the cases where seller is seeking payment of goods sold in an international commercial supply (irrespective of any issue relating to conveniens forum, i.e. proper jurisdiction)-
An Italy-based importer purchased goods from a…
|In case a dispute arises, and this is dealt with by an Italian court, the court is to apply, failing any indications by the parties, the following law/s-
Core sale contract right/obligations
matters excluded from CISG
|Ex. 1. Birmingham (UK)-based supplier, with P.O. placed through a supplier’s agent based in Italy.||CISG||Italian laws||10 years from the date of delivery, as per art. 1495 Italian civil code|
|Ex. 1-bis. Birmingham (UK)-based, with P.O. placed directly with supplier.||English laws||English laws||6 years from failed payment, as per 1980 UK Limitation Act|
|Ex. 2. New York (NY)-based supplier, with P.O. placed through a supplier’s agent based in Italy.||CISG||Italian laws||10 years from the date of delivery, as per art. 1495 Italian civil code|
|Ex. 2-bis. New York (NY)-based, with P.O. placed directly with supplier.||CISG||New York laws||6 years, as per NY Civil P&R §213|
|Ex 3. Brussels (BE)-based supplier, with P.O. placed through a supplier’s agent based in Italy.||CISG||Italian laws||10 years from the date of delivery, as per art. 1495 Italian civil code|
|Ex 3-bis. Brussels (BE)-based supplier, with P.O. placed directly with supplier.||CISG||Belgium laws||4 years, as per 1974-80 NY Convention|
|Ex 4. Bangalore (IN)-based supplier, with P.O. placed through a supplier’s agent based in Italy.||CISG||Italian laws||10 years from the date of delivery, as per art. 1495 Italian civil code|
|Ex 4-bis. Bangalore (IN)-based supplier, with P.O. placed directly with supplier.||Indian laws||Indian laws||3 years, as per 1963 Indian Limitation Act|
Per il testo in italiano della Conv. di Vienna 1980 v. CISG testo italiano a cura Buranello e Mosca