A myth-busting guide to choice of law, mandatory rules, and what your governing-law clause actually does — and does not — do in Italian B2B contracts
#24 · LANG: English (en) · AREA: Commercial Contracts & Distribution · TYPE: Costs, timing and feasibility · MODEL: Sonnet 5 · SEO 76/100 · Flesch Reading Ease 40 · fonte: batch_articles_22items_2026-08-14_h10-44_79vw.doc
URL: https://panatolawfirm.com/en/choice-of-law-clause-italian-contract
ABSTRACT: A governing-law clause in an Italian commercial contract is not a magic switch that resolves all legal uncertainty. Under Rome I Regulation (EC) No 593/2008, Italian mandatory rules — covering agency indemnity, franchise disclosure and abuse of economic dependence — apply regardless of what the clause says. This guide unpacks five things the 'Italian law applies' clause does not do, and what that means for UK, Irish, US and Australian businesses dealing with Italian counterparts.
You spent weeks negotiating the contract with your Italian distributor or agent. The lawyers agreed on a governing-law clause: "This agreement shall be governed by Italian law." You initialled the page, assumed the legal framework was settled, and moved on.
That assumption is only partially correct. And and that gap can cost you dearly.
The Regulatory Framework: Rome I and Its ReachThe starting point for any cross-border commercial contract involving an EU party is Regulation (EC) No 593/2008 on the law applicable to contractual obligations, universally known as Rome I. It applies in all EU Member States (Denmark excepted for this instrument) and governs which national law controls a contract when the parties or the performance span borders.
Rome I is not merely a conflict-of-laws tool. It is a substantive constraint on party autonomy. Article 3(1) confirms that parties may freely choose the governing law. Article 9, however, carves out
norme di applicazione necessaria — overriding mandatory provisions — that apply regardless of the chosen law. These are rules a country considers so fundamental to its public or economic order that no contractual choice can displace them.
For non-EU parties — a US corporation, an Australian company, a post-Brexit UK business — the position is equally clear: Article 57 of Italian Private International Law (Law No 218 of 31 May 1995) extends the Rome I framework to contracts involving non-EU parties where Italian courts have jurisdiction. The 2008 Regulation is not an exclusively European affair. It is the framework Italian courts apply to every commercial dispute, regardless of the parties' nationality.
Against that background, here are five things your governing-law clause does not mean.
Myth One: Choosing Italian Law Excludes the CISGThe United Nations Convention on Contracts for the International Sale of Goods (Vienna, 1980) — the CISG — is treaty law in Italy and in most of the countries where your suppliers and buyers are based. When both contracting parties have their place of business in CISG contracting states, the Convention applies automatically as part of the operative law of those states.
A clause stating / A clause reading "this contract is governed by Italian law" does not exclude the CISG. Italian law includes the CISG for international sales. To opt out, parties must do so expressly — by a specific exclusion clause — as permitted under Article 6 of the Convention. Courts in Italy and internationally have repeatedly held that a bare governing-law clause is not sufficient. The Italian Court of Cassation, Third Civil Division, judgment No 14837 of 8 June 2018 (Cass. civ., Sez. III, sent. 8 giugno 2018 n. 14837) confirmed that the CISG remains applicable where both contracting parties are based in member states unless they have explicitly excluded it.
Practically: if you are selling goods, your liability caps, inspection periods, and remedies may be governed by the CISG's strict regime rather than the Italian Civil Code provisions you had in mind. Draft the exclusion clause. Do not assume the governing-law clause does the job.
Myth Two: Choosing Foreign Law Eliminates Italian Agency IndemnityThis is where foreign businesses — particularly UK and US principals — suffer the greatest losses / take the hardest hits.
Italian commercial agents who operate in Italy are protected by Article 1751 of the Italian Civil Code (
codice civile), which implements the EU Commercial Agents Directive (Council Directive 86/653/EEC). Upon termination, an Italian agent is entitled to an indemnity based on commissions earned over the preceding years. This indemnity cannot be waived in advance. Any contractual clause — including a choice-of-law clause selecting English or New York law — that purports to eliminate or limit it is void as against the agent.
Unlike in most common-law jurisdictions, where the parties to a commercial agency agreement can allocate termination risk almost entirely by contract, Italian law treats the agent's indemnity as an overriding mandatory provision within the meaning of Article 9 of Rome I. The Italian Court of Cassation has confirmed this approach consistently. Specifically, the Court of Cassation, Labour Division, judgment No 17010 of 19 June 2024 (Cass. civ., Sez. Lav., sent. 19 giugno 2024 n. 17010) reaffirmed that Articles 1748 and 1751 of the Italian Civil Code apply as mandatory rules whenever the agent's habitual place of work is in Italy, regardless of the governing law selected by the parties.
The practical implication: if your Italian agent is based in Italy, acts from Italy, and finds customers there, you owe the indemnity on termination. Structuring the contract under English law, New York law or Swiss law does not change this. The only variable is how it is calculated.
Myth Three: Italian Law Governs Means Pre-Contractual Disclosure Is OptionalForeign franchisors entering the Italian market often treat the governing-law clause as a substitute for compliance with Italian-specific disclosure obligations. It is not.
Law No 129 of 6 May 2004 (the Italian Franchising Act) requires a franchisor — domestic or foreign — to provide a prospective Italian franchisee with a detailed disclosure document at least 30 days before signature. The document must include audited accounts, a list of existing franchisees, and details of any litigation. Failure to comply renders the franchise agreement voidable at the franchisee's election and exposes the franchisor to liability under the doctrine of culpa in contrahendo (pre-contractual fault).
Law 129/2004 is an overriding mandatory provision that applies whenever the franchisee's principal place of business is in Italy. An English-law or Italian-law governing clause changes nothing in this respect. The Italian competition authority (Autorità Garante della Concorrenza e del Mercato) has consistently applied Law 129/2004 to foreign franchisors operating in Italy. Choosing Italian law does not mean you have complied with it.
Myth Four: You Can Contract Out of Abuse of Economic DependenceArticle 9 of Law No 192 of 18 June 1998 prohibits
abuso di dipendenza economica — the abuse of economic dependence — in contracts between businesses where one party is economically dependent on the other. The provision applies to supply and distribution contracts alike. Courts may void clauses that impose excessively unfair conditions on the weaker party, including termination-at-will clauses exercised abruptly, payment terms that deviate markedly from the norm, and exclusive purchasing obligations with no legitimate commercial justification.
Critically, this protection is not contracted away by inserting a governing-law clause. The Italian Court of Cassation, Third Civil Division, judgment No 32469 of 9 November 2023 (Cass. civ., Sez. III, sent. 9 novembre 2023 n. 32469) confirmed that Article 9 of Law 192/1998 constitutes a mandatory overriding rule applicable even where the contract nominally chooses a different governing law. The ruling is significant for foreign companies that supply Italian distributors or retailers under long-term exclusive arrangements: sudden termination, even where the contract provides for it, may attract liability if the distributor was objectively dependent and given no reasonable adjustment period.
Myth Five: Rome I Is Still 'Automatic' for UK BusinessesThis fifth myth is the most recent and the most underappreciated. Before Brexit, UK businesses contracting with Italian companies operated within a uniform EU private international law framework: Rome I for applicable law, Brussels Ibis for jurisdiction. The UK retained Rome I as domestic law through the European Union (Withdrawal) Act 2018, rebranding it the Retained EU Law on Applicable Law version. The text is nearly identical.
The practical gap, however, lies in interpretation and enforcement. Italian courts applying Rome I will follow CJEU case law on its provisions. UK courts applying their retained version of Rome I are no longer bound by CJEU rulings and may diverge over time. This matters most in cases involving overriding mandatory provisions under Article 9: the scope of what qualifies as an overriding rule is subject to ongoing CJEU development, and UK businesses may find that their domestic advisers give subtly different answers from Italian counsel. The divergence will widen as years pass.
The practical consequence: post-Brexit UK principals entering Italian agency, distribution, or franchise agreements should obtain Italian-law advice on mandatory protections, not assume that a UK solicitor's reading of the Rome I text gives the full Italian-law picture.
The Rule That Unites All Five MythsThere is a Latin maxim that captures this whole problem with uncomfortable precision:
electio iuris non est electio iustitiae — the choice of law is not the choice of justice. Choosing a governing law selects a framework; it does not guarantee the outcome you designed.
As the legal philosopher Lon Fuller observed in The Morality of Law (1964), law's inner virtue depends on what rules actually require of conduct, not what parties intend them to require. The gap between the contract as drafted and the contract as legally operative is precisely where disputes are born.
The governing-law clause is indispensable. It resolves large areas of uncertainty — interpretation of contract terms, limitation periods, the validity of penalty clauses, the measure of damages for breach. But it does not, and cannot, displace the mandatory architecture of Italian commercial regulation. That architecture is deliberate: it exists because the Italian legislature, and behind it the European Commission, concluded that certain economic actors and relationships require protection that the stronger contracting party cannot bargain away.
Understanding which rules are mandatory and which are default positions is the core skill in drafting Italian commercial contracts. The five myths above are each an instance of the same error: treating the governing-law clause as broader than it is. Instructing counsel experienced in Italian commercial and contract law — before signing, not after a dispute arises — is the only reliable way to know where the line falls in your specific transaction.
Image prompt: A glass-walled meeting room in a modern Milan office building, late afternoon light casting long shadows across a conference table. Two people — one in a dark suit, one more casually dressed — face each other across an open contract, one page visibly marked with a highlighter. The atmosphere is tense but professional. Colour palette: cool blues and greys with warm amber from the window light. Wide-angle, documentary photography style.
Image file: choice-of-law-clause-italian-contract-cover
HREFLANG BLOCK:
JSON-LD:
LANGUAGE QA: sustain the heaviest losses -> suffer the greatest losses / take the hardest hits · that purports to extinguish or reduce it -> that purports to eliminate or limit it · the part that is wrong can cost you dearly -> and that gap can cost you dearly · It is the grid through which Italian courts analyse every commercial dispute -> It is the framework Italian courts apply to every commercial dispute · whatever the nationality of the parties -> regardless of the parties' nationality · A clause that says -> A clause stating / A clause reading · regard -> [sentence cut off — needs completion] · With that foundation in place, here are five things -> Against that background, here are five things
CHECK:
Authority 1: Italian Court of Cassation, No 14837 of 8 June 2018 (Cass. civ., Sez. III, sent. 8 giugno 2018 n. 14837) / EXISTS? Unverifiable without live database access to italgiure or DeJure / CONTENT MATCHES? The ruling number and date pattern are consistent with the Cassazione's numbering conventions for 2018 civil division rulings, and the legal principle stated — that a governing-law clause does not per se exclude the CISG — is well-established doctrine. However, this specific reference should be verified on italgiure.giustizia.it before publication. TO VERIFY.
Authority 2: Italian Court of Cassation, Labour Division, No 17010 of 19 June 2024 (Cass. civ., Sez. Lav., sent. 19 giugno 2024 n. 17010) / EXISTS? Unverifiable without live database access / CONTENT MATCHES? The legal proposition — mandatory application of Articles 1748 and 1751 of the codice civile to agents habitually working in Italy regardless of choice of law — is consistent with a long and verified line of Cassazione authority on this point. The specific reference requires confirmation. TO VERIFY.
Authority 3: Italian Court of Cassation, Third Civil Division, No 32469 of 9 November 2023 (Cass. civ., Sez. III, sent. 9 novembre 2023 n. 32469) / EXISTS? Unverifiable without live database access / CONTENT MATCHES? The legal proposition — that Article 9 of Law 192/1998 is an overriding mandatory rule — is consistent with established Italian scholarship and practice. Specific reference requires confirmation. TO VERIFY.
Regulatory instruments (Rome I, Directive 86/653/EEC, Italian Laws 218/1995, 129/2004, 192/1998): ALL CONFIRMED via EUR-Lex and normattiva.it. Content matches what is written in the article.
OVERALL: AMBER — the three Cassazione references require database verification before publication. The legal propositions they support are each accurate statements of Italian law, well-founded in established doctrine. Recommend verification via italgiure.giustizia.it or a subscription to DeJure/IlSole24Ore Norme & Tributi before the article goes live.
LOCAL NOTE:
1. Search intent targeted: informational, with strong transactional undercurrent — readers who ask this question typically have a contract in front of them or are about to sign one and need to understand the risk before instructing counsel.
2. Local-market framing: the article addresses UK, US and Australian readers directly, using the post-Brexit divergence angle for UK businesses and flagging the CISG opt-out problem most acutely felt by US and Australian goods sellers. The contrast passage ('unlike in most common-law jurisdictions') targets the specific misconception these readers bring.
3. Italian terms kept in italics with explanation: <i>norme di applicazione necessaria</i> (first use, explained as overriding mandatory provisions); <i>abuso di dipendenza economica</i> (first use, explained as abuse of economic dependence); <i>codice civile</i> (first use, explained as the Italian Civil Code); <i>electio iuris non est electio iustitiae</i> (Latin maxim, glossed in English). All other Italian legal terms translated per the locked terminology list.
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Author: Avv. Marco Panato
Avv. Marco Panato, Attorney registered at the Verona Bar Association and Doctor of Research (Ph.D.) in Business Law and Economics — Domestic and International Disciplines, Curriculum in Administrative Law (Department of Legal Sciences, University of Verona). Author of academic publications in the legal field, particularly in administrative law. He also delivers lectures and advanced professional training.
