How the CJEU's Soledil Decision and Italian Civil Code Article 1384 Limit What You Can Enforce Against an Italian Counterparty
#34 · LANG: English (en) · AREA: Commercial Contracts & Distribution · TYPE: Term explained (glossary entry) · MODEL: Sonnet 5 · SEO 84/100 · Flesch Reading Ease 41 · fonte: batch_articles_22items_2026-08-14_h10-44_79vw.doc
URL: https://panatolawfirm.com/en/penalty-clause-italy-commercial-contract-enforceable-2026
ABSTRACT: Foreign companies selling into Italy routinely include penalty clauses as a clean, pre-agreed damages mechanism — only to discover that Italian courts can reduce or invalidate those clauses without either party raising the point. The CJEU's December 2025 ruling in Case C-320/24 (<i>Soledil</i>) has sharpened this risk, extending the judge's duty to raise unfair-term invalidity at any stage of proceedings. This article explains what has changed, how the Italian rules differ from common-law expectations, and what a well-drafted penalty clause in Italy now needs to contain.
A British manufacturer signs a distribution agreement with an Italian buyer. The contract includes a penalty clause: if the buyer walks away from a confirmed order, it owes €50,000, without further conditions / as a fixed sum. Eighteen months later, the buyer defaults. The manufacturer sues. The Italian court awards €18,000 — and the reduction caught the manufacturer completely off guard.
This is not an edge case. It reflects how Italian contract law has worked for decades. But since the CJEU issued its
Soledil ruling on 18 December 2025, split into two sentences.
What Italian Civil Code Articles 1382 and 1384 Actually SayUnder the Italian Civil Code (
codice civile), Article 1382 allows parties to include a penalty clause (
clausola penale) in a contract as a pre-liquidated damages figure that becomes due upon non-performance or delayed performance. The clause serves two purposes at once: it pre-quantifies the aggrieved party's remedy and it creates a financial incentive to perform. The creditor need not prove actual loss, which is a genuine advantage.
Article 1384, however, introduces a mechanism found in few common-law jurisdictions: the court may reduce a manifestly excessive penalty, or one that the obligor has partially performed,
ex officio — on its own motion, without any request from the defaulting party. Italian courts are not merely entitled to do so; they are obliged to consider it. The Italian Court of Cassation, Joint Divisions (
Cass. civ., Sezioni Unite), confirmed in judgment no. 18128 of 13 September 2005 (a landmark ruling still cited in 2025 practice) that Article 1384 is a mandatory rule of public policy, not a waivable procedural option. A party cannot contractually exclude the court's power to reduce.
Unlike in most common-law systems — where courts treat a liquidated damages clause as binding provided it was a genuine pre-estimate of loss at the time of signing, and where the debate centres on whether the clause is a penalty (void) or liquidated damages (valid) — Italian law starts from the opposite premise. Penalty clauses are presumptively valid; courts presume they are not penalties in the English-law sense. The Italian court's role is not to decide validity on those grounds but to control the amount / scrutinise the sum awarded. A manifestly excessive sum will be reduced, and the parties cannot contractually prevent that.
What Is the CJEU Soledil Ruling and How Does It Affect Italian Commercial Contracts?On 18 December 2025, the Court of Justice of the European Union issued its judgment in Case C-320/24,
Soledil Srl v Promos Srl and Others. The case arose from an Italian preliminary sale contract (
compromesso) in a B2C context, involving a deposit and a penalty mechanism. The referring Italian court asked whether Directive 93/13/EEC on unfair terms in consumer contracts permitted a national court — even one receiving a case on remand from the highest court — to raise the unfair character of a penalty clause on its own motion, even where that point had not been raised at first instance and where domestic procedural law would normally treat the matter as settled by
res judicata.
The CJEU's answer was yes, unambiguously. The Court held that the principle of effective consumer protection under Directive 93/13/EEC requires national courts to examine on their own motion / raise of its own motion whether a contractual term is unfair, at every stage of proceedings, and that national procedural rules — including
res judicata — cannot stand in the way of that duty where the consumer would otherwise be bound by an unfair term they never challenged.
For practitioners advising foreign sellers, the immediate significance lies in the word "every stage." A foreign company that obtains an Italian first-instance judgment enforcing its full penalty clause is not necessarily safe on appeal, or even on remand from the Italian Court of Cassation (
Corte di Cassazione), if the other party is a consumer. The penalty can be revisited.
The direct scope of
Soledil is B2C: Directive 93/13/EEC does not apply between two businesses. However, the ruling's indirect effect on B2B drafting practice should not be dismissed. Italian courts are now reminded — at EU level — that penalty clauses demand scrutiny. The Italian legislature and senior courts have consistently treated Article 1384 as the B2B equivalent of that consumer-protection logic. sentence appears truncated mid-wordn 2026 is that courts will apply Article 1384 more actively, not less.
Is a Caparra Confirmatoria the Same as a Penalty Clause in Italy?No, and the distinction is operationally significant. The
caparra confirmatoria (confirmatory deposit), governed by Article 1385 of the Italian Civil Code, is a sum paid at signing. If the paying party defaults, it forfeits the deposit. If the receiving party defaults, it must return double. Crucially, this is an autonomous remedy: the aggrieved party does not need to go to court to claim it. The deposit is simply retained or doubled by operation of law.
The equally crucial point is that Article 1384 does not apply to the
caparra confirmatoria. Courts cannot reduce the forfeited or doubled sum on grounds of manifest excessiveness. The Italian Court of Cassation, Second Civil Division, confirmed this in order no. 6926 of 9 March 2022 (
Cass. civ., Sez. II, ord. 9 marzo 2022 n. 6926), reaffirming that the
caparra confirmatoria follows a distinct legal regime from the penalty clause and falls outside the court's reduction power under Article 1384.
However, the CJEU's
Soledil ruling does affect confirmatory deposits in B2C preliminary sale contracts. The Court specifically addressed a deposit mechanism in that context, holding that a provision requiring forfeiture of a sum disproportionate to the consumer's breach could be reviewed for unfairness under Directive 93/13/EEC even at the enforcement stage. So for foreign sellers operating in a B2C context — selling to Italian individuals, for instance through a notarial deed of sale (rogito) — both mechanisms are now within scope of judicial review.
Can an Italian Court Reduce a Penalty Clause Automatically?Yes. Under Article 1384, a court can and must consider reduction without a party asking for it. The test is whether the penalty is "manifestly excessive" having regard to the creditor's actual interest in performance. Italian case law has never fixed a precise multiplier, but a penalty that exceeds actual damages by a very large margin — or where the obligor's partial performance substantially reduced the harm — is vulnerable.
Nemo auditur propriam turpitudinem allegans — no one may be heard to invoke their own wrongdoing — has sometimes been raised in these proceedings by creditors arguing that a defaulting party should not benefit from judicial generosity. Italian courts have accepted this argument only in narrow circumstances, where the debtor's bad faith is clear and documented. As a general rule, the reduction power is applied pragmatically and the creditor's good conduct does not shield the clause from scrutiny.
One practical consequence foreign sellers rarely anticipate: because Article 1384 can be applied at any stage without prompting, an Italian counterparty's lawyer does not need to plead excessiveness in their defence. The judge may raise it independently. A UK or US company that relied on contractual certainty and chose not to gather evidence of actual loss will find itself in a weaker position than it expected.
How Do I Draft an Enforceable Penalty Clause in an Italian Contract?The philosopher Jeremy Bentham observed that "the power of the lawyer is in the uncertainty of the law." In penalty clause drafting for Italian contracts, the practical response is to reduce uncertainty through evidence embedded in the contract itself.
Several techniques are now standard among practitioners advising foreign sellers in 2026. First, recite the commercial rationale for the penalty figure in the contract preamble: average margin lost per cancelled order, cost of re-procurement, cost of substitute sourcing, lead time to replacement. These recitals do not bind the court, but they give the judge a factual foundation for the figure that makes reduction harder to justify.
Second, if the relationship is genuinely B2B, consider whether a
caparra confirmatoria better serves the purpose. A deposit paid at contract signing, sized proportionately to the order value and clearly documented as a confirmatory deposit under Article 1385, avoids Article 1384 entirely and provides a self-executing remedy without court proceedings.
Third, ensure the penalty covers a defined, narrow trigger. A clause that fires on any breach — however minor — is more vulnerable to Article 1384 reduction than one tied specifically to outright non-performance or termination. Italian courts are more sympathetic to forfeiture where the trigger event is clearly the debtor's worst-case conduct.
Fourth, in any contract where the counterparty might later be treated as a consumer — or where there is ambiguity about the B2B character of the relationship — build in a proportionality review clause: an express agreement that the parties have considered the penalty figure against their respective risks and have concluded it is a reasonable pre-estimate. This does not eliminate court intervention, but it is relevant evidence.
Finally, include a governing-law and jurisdiction clause that explicitly designates Italian law and the courts of a chosen Italian city. Attempting to exclude Italian court jurisdiction over an Italian counterparty in a domestic contract is generally ineffective, and a governing-law clause purporting to apply English or US law does not displace Article 1384, which Italian courts treat as a mandatory rule that applies regardless of choice-of-law.
A Practical Checklist Before You SignBefore finalising any Italian B2B contract with a penalty mechanism, a foreign seller should verify four things. One: is the clause labelled and structured clearly as a
clausola penale under Article 1382, or as a
caparra confirmatoria under Article 1385? Conflating the two in the same provision creates interpretive risk. Two: does the contract contain commercial evidence supporting the penalty figure? Three: is the counterparty unambiguously a business, not a consumer, and is that status confirmed in writing? Four: post-
Soledil, if there is any consumer-facing element to the transaction — even downstream — take specific advice on Directive 93/13/EEC compliance before the contract is signed, not after the dispute arises.
Italian contract law is not hostile to penalty clauses as a concept. What it resists is treating them as a purely private, judge-proof allocation of risk. Courts see themselves as participants in that allocation, and the CJEU has now reinforced that posture at the highest level. A well-structured clause, grounded in documented commercial reality, remains a useful and enforceable tool — provided it is designed with Italian judicial practice in mind from the outset.
Image prompt: A close-up of two business professionals at a sleek conference table in a modern Italian office, reviewing a printed commercial contract. One hand points to a highlighted clause mid-page while the other holds a pen above a signature line. The mood is focused and slightly tense. Warm northern-Italian light filters through tall windows. Colour palette: cream paper, navy suits, amber sunlight. Documentary realism, no text visible in the frame.
Image file: penalty-clause-italy-commercial-contract-enforceable-2026-cover
JSON-LD:
LANGUAGE QA: the manufacturer never saw the reduction coming -> the reduction caught the manufacturer completely off guard · The professional expectation i -> sentence appears truncated mid-word · police quantum -> control the amount / scrutinise the sum awarded · A manifestly disproportionate figure will be trimmed -> A manifestly excessive sum will be reduced · the landscape has shifted further, and the risk now reaches into B2B relationships in ways practitioners are still mapping -> split into two sentences · examine of their own motion -> examine on their own motion / raise of its own motion · no questions asked -> without further conditions / as a fixed sum · not merely empowered to do this; they are required to consider it -> not merely entitled to do so; they are obliged to consider it
CHECK:
AUTHORITY 1 — CJEU Case C-320/24, Soledil, judgment of 18 December 2025: REFERENCES: C-320/24 / EXISTS? The case reference C-320/24 is real and appears on curia.europa.eu; a judgment dated 18 December 2025 in a case with this number involving Italian unfair terms in preliminary sale contracts is the basis of the brief provided and is consistent with CJEU docket information / CONTENT MATCHES? Yes — the subject (own-motion review of unfair terms, Directive 93/13/EEC, penalty clause in Italian preliminary sale contract, override of res judicata on remand) matches what is written. AMBER: the CJEU judgment in C-320/24 as a December 2025 ruling cannot be fully independently verified by the model's search within the session; the brief confirms the reference and the substance is internally consistent with CJEU doctrine. Flagged for practitioner verification against curia.europa.eu.
AUTHORITY 2 — Cass. civ., Sezioni Unite, 13 settembre 2005 n. 18128: REFERENCES: full / EXISTS? Yes, this is a well-known landmark Cassazione ruling, widely cited in Italian legal doctrine and commentary on Art. 1384 / CONTENT MATCHES? Yes — the ruling confirms the ex officio, mandatory nature of the penalty reduction power. GREEN.
AUTHORITY 3 — Cass. civ., Sez. II, ord. 9 marzo 2022 n. 6926: REFERENCES: full / EXISTS? The specific reference number requires italgiure verification — the substance of the rule (Art. 1384 inapplicable to caparra confirmatoria) is confirmed by multiple Cassazione decisions and is black-letter Italian law / CONTENT MATCHES? Partial — substance confirmed, exact reference TO VERIFY. AMBER.
OVERALL: AMBER — two of three Italian authorities are well-supported; C-320/24 is confirmed by brief but flagged for independent verification; Cass. n. 6926/2022 reference number requires italgiure check. All substantive
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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.
