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The Impact of the Law Decree “Decreto Sostegni Bis” (DL n. 73/2021) on Raw Materials Price Contracts and Public Tenders | K&L Gates LLP

The gradual alleviation of the COVID-19 emergency brought about the gradual resumption of company pursuits and the recovery of different sectors, which experienced been inactive for a extended interval. This has resulted in a growth in demand from customers and exponential improves in the costs of selected products, like steel. Such financial conjuncture led not only to a lack of vital uncooked components but also to an raise of critical imbalances in contractual relations—also in the construction sector—due to the appreciable improves in mounted charges.

In this sort of circumstances, Write-up 1664 of the Italian Civil Code has often been the common regulatory cure. This gives a general value revision for boosts or decreases of extra than just one tenth of the agreed value. In perspective of the urgency of the predicament, a new unique process was a short while ago introduced in art. 1-septies (Urgent provisions about revision of selling prices of materials in public contracts), Law Decree no. 73/2021 (e.g., “Decreto Sostegni-Bis”), converted into Legislation no. 106/2021, still to be executed with the ministerial decree referred to in the 1st paragraph.

The new provision envisaged by “Decreto Sostegni-bis” is in line with the various federal government intervention contained in these types of polices aiming at supporting businesses in many sectors. Broadly, artwork. 1-septies supplies for a value review in community contracts primarily based on the improved value on materials as a result of compensation measures by the contracting authority. This kind of mechanisms are dependent on clearer and stricter standards than all those set out less than Posting 1664 of the Italian Civil Code, which should really be significantly less arbitrary and therefore deliver a obvious edge for contractors.

However, there are however important considerations, which could undermine the application of the new emergency regulation.

Article 1664 of the Italian Civil Code and the “ordinary” price tag revision process

Report 1664, paragraph 1, of the Italian Civil Code offers that the contractor or the consumer may possibly request a revision of the agreement rate, should unforeseeable situation consequence in raises or decreases in the value of materials or labor, in extra of 1-tenth of the complete agreed selling price. This provision aims to mitigate inflationary phenomena main to value overruns. The reference to the “one-tenth of the full price” is normally calculated not in opposition to the share improve in the rate of supplies for every se, but against the genuine affect on the in general contractual price tag.

Short article 1664 of the Italian Civil Code can be waived. This implies that the get-togethers may well create a distinct threshold for improves, or exclude from revision the cost raise of sure providers. Additionally, the revision should be calculated definitively only upon completion of the do the job or provider. Therefore, the contractor would not have a comprehensive right to the payment of improvements all through the course of the agreement, major to destructive outcomes also from a hard cash standpoint.

On the complete, mentioned provision is not always very easily and instantly enforceable. As a outcome, all through the present crisis interval, it did not make it possible for for complete security of the weaker celebration in tender contracts, failing to re-create the contractual stability.

Article 1-septies of “Decreto Sostegni Bis”—the new selling price revision by payment and the state fund of €100 million

The new provision envisages a distinctive compensation process, which can also derogate from the Community Contracts Code, generally restrictive and elaborate for most enterprises. The alterations in costs, as recorded by the minister of infrastructure and transport with the specific decree referred to in the very first paragraph, shall be applied to the portions of elements used in the works carried out and accounted for by the will work manager from 1 January 2021 until finally 30 June 2021. These decree, which really should have been adopted by 30 Oct 2021, shall report the proportion improvements, upward or downward, better than 8%, developing for the duration of the initial 6 months of 2021 in the individual prices of the most major construction components.

Within just 15 days of publication of the over decree in the formal journal, contractors might submit a specific request for payment to the contracting authority. Every single contracting authority will offer the asked for payment, in the manner indicated, mostly with its very own means and within the limitations of 50% of sources set aside for contingencies in the economic framework. This in addition to the amounts pertaining to contractual commitments now carried out, as effectively as to any even more sums concerned. In the party these resources are not adequate, the contracting authority may make up the distinction by requesting obtain to the distinct fund established 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 spending plan of this sort of fund is at this time divided in €34 million for compact companies, €33 million for medium-sized companies, €33 million for substantial firms. There does not seem to be to be a precedence buy of distribution within just each and every of the a few groups. In truth, as presented for in the higher than decree, each firm participates in the distribution of the resources allotted “exclusively on the foundation of its personal qualification” (as a compact, medium-sized, or massive enterprise).

Regardless of the in depth laws, as briefly summarized over, there are continue to various open points and unsure issues, which could have an impact on the effectiveness of the safety afforded by the new crisis legislation.

Issues of interpretation and open up details

The scope of the regulation seems relatively restricted. It appears to consist of only the public works sector (hence excluding non-public contracts). But it also solid doubts, at the existing time, on all people contracts that do not strictly fall in just the group of tender contracts (e.g., “contratti d’appalto”). These would incorporate, for occasion, individual provide contracts the place there is no determine as that of the “works manager”, especially outlined in the third paragraph of post 1-septies of Regulation Decree no. 73/2021.

It stays equally unsure whether claimed regulation can be applied to international firms. Nevertheless, also in line with EU legislation on freedom of movement and competitiveness, all EU contractors ought to be incorporated in the scope, as lengthy as the general public contracts in dilemma are in place with Italian contracting authorities in the course of the relevant phrase (e.g., as of 23 July 2021) that is the date of acceptance of the conversion regulation.

It is likely that the new Article 1-septies of Regulation Decree no. 73/2021, also insofar as it aims at dealing with transitional “exceptional” emergencies, can be experienced as obligatory. This would be a to start with distinction with Report 1664 of the Italian Civil Code, which, as pointed out, can be waived. As a result, it may well be argued that the new compensation process also applies to these contracts that expressly exclude rate revision adjustments or which, to various degrees, derogate from the civil law provisions.

It could also be argued irrespective of whether Posting 1664 of the Italian Civil Code can be enforced in conjunction with Post 1-septies of Law Decree no. 73/2021. Absolutely, the reference to improves or decreases “exceeding 10% in whole if associated to additional than just one year”, as for each paragraph 3, would appear to be to implicitly consist of the provisions of Post 1664 of the Italian Civil Code. If that is the case, the two cures could not be enforced together.

A further substantial change might be the topic of the percentage variation. According to a literal interpretation of the regulation, Write-up 1-septies of Regulation Decree 73/2021, paragraph 1, envisages that the minister of infrastructure and transport documents the percentage variants in the person price ranges of the most significant design elements. However, it does not mention the real influence of this sort of variants on the deal as a total. Write-up 1664 of the Italian Civil Code, on the other hand, need to the right way include versions in opposition to the influence on the total cost of the contract, and not only raises or decreases in specified unique elements.

As for the latter, Posting 1-septies of Legislation Decree 73/2021 does not specify the kind of supplies, but generally refers to “the most considerable design materials”. It is most likely that steel and other supplies from the steel sector that are widely employed may slide in the definition. Hopefully, the ministerial decree, to be adopted as per paragraph 1, will drop light-weight on sure uncertainties and also consist of a exact record of the supplies concerned.

And lastly, there are nevertheless other operational challenges that remain unclear, as the identification of the party which will be expected to carry out and/or existing the “calculations” for the offsets. The regulation supplies that these kinds of calculations are carried out by the contracting authority when the revision is downward (e.g., to its very own gain). Nevertheless, there is no point out of the scenario of upward revision. This would propose, probably, that such responsibility may possibly be shared, to some extent, concerning the contracting authority and the contractor.

Feasible difference in treatment—contracts in the private sector and other styles of contract

There were being some critics, specifically from trade associations, highlighting the deficiency of comparable regulation in the non-public contracting sector. This is also in get to make it possible for the continuation of the regulatory interventions relevant to the “110% Superbonus”, currently expiring on 30 June 2022. Furthermore, it has been underlined the require to lengthen the scope of software of Report 1-septies of Regulation Decree 73/2021 to technological know-how offer contracts, or to undertake analogous regulation, on the model of that offered by the posting in problem. This would permit to offer with the remarkable price improves registered in that sector. On this level, the new compensation process, getting “exceptional”, would not be subject to an interpretation by analogy.

On the complete, irrespective of that the ratio legis underlying the introduction of these kinds of unique regulation appears substantially similar to that of Short article 1664 of the Italian Civil Code, there are continue to important operational difficulties that continue to be unsure and regulatory loopholes, to start with of all on the private or community nature of the connection.

Ideally the lawmaker, initial with claimed ministerial decree and, possibly, with further more steps, will explain and address some of the vital difficulties with regards to interpretation and application of Write-up 1-septies of Regulation Decree 73/2021.