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Impacts of Italy’s Decree On Raw Material Price Contracts and Public Tenders

The gradual alleviation of the Covid-19 emergency introduced about the gradual resumption of business activities and the recovery of several sectors, which experienced been inactive for a lengthy period of time. This has resulted in a boom in need and exponential will increase in the charges of particular products, like metal. This sort of financial conjuncture led not only to a shortage of essential uncooked resources but also to an increase of serious imbalances in contractual relations—also in the construction sector—due to the sizeable will increase in preset prices.

In this sort of cases, Write-up 1664 of the Italian Civil Code has usually been the usual regulatory cure. This delivers a typical cost revision for improves or decreases of much more than 1 tenth of the agreed cost. In view of the urgency of the problem, a new distinctive course of action was recently launched in artwork. 1-septies (Urgent provisions regarding revision of selling prices of supplies in community contracts), Regulation Decree no. 73/2021 (e.g., “Decreto Sostegni-Bis”), converted into Law no. 106/2021, nevertheless to be carried out with the ministerial decree referred to in the 1st paragraph.

The new provision envisaged by “Decreto Sostegni-bis” is in line with the numerous governing administration intervention contained in such rules aiming at supporting businesses in different sectors. Broadly, art. 1-septies delivers for a value critique in general public contracts centered on the adjusted rate on resources via payment measures by the contracting authority. These mechanisms are based mostly on clearer and stricter standards than these established out below Article 1664 of the Italian Civil Code, which ought to be less arbitrary and hence supply a clear gain for contractors.

Nevertheless, there are nonetheless substantial concerns, which could undermine the software of the new unexpected emergency regulation.


Posting 1664, paragraph 1, of the Italian Civil Code delivers that the contractor or the client may perhaps request a revision of the deal rate, should really unforeseeable circumstances final result in improves or decreases in the price tag of products or labor, in excessive of one particular-tenth of the full agreed price tag. This provision aims to mitigate inflationary phenomena major to price tag overruns. The reference to the “one-tenth of the full price” is generally calculated not in opposition to the proportion change in the price tag of components per se, but versus the true affect on the overall contractual charge.

Write-up 1664 of the Italian Civil Code can be waived. This indicates that the parties might create a diverse threshold for raises, or exclude from revision the charge increase of specific solutions. Furthermore, the revision should be calculated definitively only on completion of the work or company. Therefore, the contractor would not have a whole appropriate to the payment of developments all through the course of the contract, leading to negative results also from a income standpoint.

On the total, explained provision is not normally effortlessly and immediately enforceable. As a result, in the course of the existing emergency period of time, it did not enable for complete safety of the weaker celebration in tender contracts, failing to re-build the contractual balance.


The new provision envisages a particular payment course of action, which can also derogate from the Public Contracts Code, normally restrictive and complicated for most enterprises. The alterations in prices, as recorded by the minister of infrastructure and transportation with the distinct decree referred to in the 1st paragraph, shall be applied to the quantities of supplies utilized in the works carried out and accounted for by the performs supervisor from 1 January 2021 right until 30 June 2021. Such decree, which should have been adopted by 30 October 2021, shall document the share improvements, upward or downward, larger than 8{e421c4d081ed1e1efd2d9b9e397159b409f6f1af1639f2363bfecd2822ec732a}, taking place in the course of the initially 6 months of 2021 in the unique costs of the most considerable construction elements.

Within 15 days of publication of the above decree in the official journal, contractors may post a distinct request for compensation to the contracting authority. Every contracting authority will supply the requested compensation, in the fashion indicated, largely with its possess sources and within the limits of 50{e421c4d081ed1e1efd2d9b9e397159b409f6f1af1639f2363bfecd2822ec732a} of sources established aside for contingencies in the economic framework. This in addition to the amounts pertaining to contractual commitments already undertaken, as effectively as to any additional sums associated. In the celebration these cash are not sufficient, the contracting authority may make up the distinction by requesting entry to the specific fund founded by the minister of infrastructure and transportation, with a price range of €100 million for 2021.

As envisaged in the current ministerial decree signed on 30 September 2021, the price range of this sort of fund is presently divided in €34 million for small companies, €33 million for medium-sized businesses, €33 million for huge firms. There does not appear to be a precedence get of distribution in just every single of the 3 types. In truth, as furnished for in the higher than decree, every single business participates in the distribution of the assets allotted “exclusively on the foundation of its have qualification” (as a little, medium-sized, or massive business).

In spite of the specific restrictions, as briefly summarized over, there are still a number of open factors and uncertain troubles, which could affect the performance of the security afforded by the new unexpected emergency legislation.

Problems OF INTERPRETATION AND Open up Factors

The scope of the regulation looks reasonably restricted. It appears to incorporate only the general public works sector (therefore excluding personal contracts). But it also forged uncertainties, at the existing time, on all those contracts that do not strictly slide within just the category of tender contracts (e.g., “contratti d’appalto”). These would include things like, for occasion, individual provide contracts the place there is no determine as that of the “works manager”, precisely mentioned in the third paragraph of post 1-septies of Law Decree no. 73/2021.

It remains similarly unsure no matter whether reported regulation can be used to overseas companies. Having said that, also in line with EU laws on flexibility of motion and level of competition, all EU contractors should really be incorporated in the scope, as extensive as the general public contracts in query are in location with Italian contracting authorities during the applicable phrase (e.g., as of 23 July 2021) that is the day of approval of the conversion regulation.

It is probable that the new Article 1-septies of Law Decree no. 73/2021, also insofar as it aims at working with transitional “exceptional” emergencies, can be qualified as mandatory. This would be a initially difference with Post 1664 of the Italian Civil Code, which, as stated, can be waived. As a result, it may well be argued that the new compensation procedure also applies to those people contracts that expressly exclude cost revision adjustments or which, to varying levels, derogate from the civil regulation provisions.

It could also be argued no matter if Article 1664 of the Italian Civil Code can be enforced in conjunction with Article 1-septies of Regulation Decree no. 73/2021. Absolutely, the reference to will increase or decreases “exceeding 10{e421c4d081ed1e1efd2d9b9e397159b409f6f1af1639f2363bfecd2822ec732a} in whole if related to additional than one year”, as for every paragraph 3, would appear to implicitly include things like the provisions of Short article 1664 of the Italian Civil Code. If that is the situation, the two therapies could not be enforced with each other.

A further substantial difference may well be the matter of the percentage variation. In accordance to a literal interpretation of the regulation, Posting 1-septies of Regulation Decree 73/2021, paragraph 1, envisages that the minister of infrastructure and transport data the share variants in the particular person rates of the most considerable design supplies. Nevertheless, it does not mention the precise effect of such variants on the agreement as a full. Posting 1664 of the Italian Civil Code, on the other hand, really should effectively consist of variations in opposition to the effects on the over-all price tag of the agreement, and not only will increase or decreases in sure unique products.

As for the latter, Article 1-septies of Legislation Decree 73/2021 does not specify the form of materials, but typically refers to “the most important development materials”. It is probably that metal and other resources from the metal sector that are greatly utilised may well tumble inside of the definition. With any luck ,, the ministerial decree, to be adopted as per paragraph 1, will get rid of light on selected uncertainties and also contain a precise record of the materials concerned.

Lastly, there are still other operational issues that continue to be unclear, as the identification of the occasion which will be necessary to have out and/or present the “calculations” for the offsets. The regulation gives that this kind of calculations are carried out by the contracting authority when the revision is downward (e.g., to its individual advantage). Having said that, there is no mention of the scenario of upward revision. This would counsel, potentially, that these kinds of responsibility may possibly be shared, to some extent, between the contracting authority and the contractor.

Feasible Variance IN TREATMENT—CONTRACTS IN THE Personal SECTOR AND OTHER Varieties OF Contract

There were being some critics, specifically from trade associations, highlighting the lack of comparable regulation in the non-public contracting sector. This is also in purchase to permit the continuation of the regulatory interventions similar to the “110{e421c4d081ed1e1efd2d9b9e397159b409f6f1af1639f2363bfecd2822ec732a} Superbonus”, at present expiring on 30 June 2022. Furthermore, it has been underlined the want to extend the scope of application of Report 1-septies of Legislation Decree 73/2021 to technological know-how source contracts, or to adopt analogous regulation, on the model of that offered by the short article in query. This would let to offer with the excellent price raises registered in that sector. On this position, the new compensation process, remaining “exceptional”, would not be subject matter to an interpretation by analogy.

On the full, regardless of that the ratio legis underlying the introduction of this sort of special regulation looks considerably very similar to that of Post 1664 of the Italian Civil Code, there are still important operational challenges that continue to be uncertain and regulatory loopholes, first of all on the personal or community mother nature of the connection.

Hopefully the lawmaker, to start with with mentioned ministerial decree and, perhaps, with more actions, will make clear and address some of the significant concerns relating to interpretation and application of Report 1-septies of Regulation Decree 73/2021.