Contract law and negotiations in Italy

Contract law and negotiations in Italy

Contracts and negotiations in Italy

What do you need to know about Italian business culture?

Italians put a strong emphasis on building trusting relationships. This is especially important if you want to do your business in the South of Italy, where the people value close-knit ties, personal networks, and strong bonds. On the other hand, in North Italy, while the relationship is still an essential factor, it is not a must-have prerequisite during initial phases. The North manner is more business-focused and serious while the South is relaxed and personal.

Regardless where you are, a bella figura (beautiful posture) is of paramount importance. It means you need to have a proper conduct and uphold societal formalities. Being disrespectful towards your counterparts, their country, and family can seriously harm your business.

What are negotiation tactics in Italy?

  • When you want to establish initial relationships, it is best to do this through a local representative.
  • Meetings should be scheduled two or three weeks in advance.
  • You should inform your counterparts about meeting attendees, the names, positions, responsibilities.
  • When you are late for meetings, you need to inform your counterparts.
  • During the negotiation process, you need to be patient to avoid conflict at all costs.
  • The pace of discussion is slow.
  • You should focus on long-term commitments and win-win solutions.

How much is the contract worth in Italy?

Italian people will expect you to keep to your oral contracts. However, do note that during discussions, there may be many interim agreements, which are different from the final ones.

What are pricing policy, pressure and restraints in Italy?

It is common to encounter  hard negotiations in business meetings. It is nothing but merely discussing the ideas freely without much hesitation. Hard bargaining over pricing and delivery matters is not uncommon.

The Italian legal system

Italy has a civil law system. The parliament holds legislative power while the Council of Ministers handles the execution. The Consiglio Superiore della Magistratura, consisted of 27 members, watch over the practice of law in Italy. The law covers many aspects, including:

  • Family law
  • Criminal law
  • Administrative law

Italy operates on codified law. Italian judges are selected professionally through a competitive state examination. Judges have the status of being public officers. The Italian legal procedures do not have juries. The judgements are completely governed by the law as codified in the Code of Civil Procedure, originally published in 1942. The code  has undergone many modifications since. Civil procedural rules  are also a part of the Civil Code.

Italy’s court system is 2-tiered. Civil proceedings in Italy move from Courts of First Instance to Courts of Second Instance and then the Supreme Court (“Corte di Cassazione”). Total independence of the ordinary judiciary from interference is guaranteed by the constitution. This makes it difficult for the executive powers to exert any direct influence on the judiciary.

What are the arbitration and litigation processes in Italy?

Arbitration

Recently Italy moved legislation in favour of Alternative Dispute Resolution towards mediation in order to reduce the workload in courts.

Arbitration, therefore, is viewed favourably by concerned stakeholders. In Italy arbitration is found to be more expensive than court proceedings, therefore, mostly used in commercial disputes. Though ad hoc arbitration proceedings are not uncommon, they can be also carried out under the rules of an arbitral institution. The Chamber of Arbitration of Milan is one of the most popular Italian arbitral institution.

Some rules governing the Italian Arbitration process:

  • The by-laws of a company could have an arbitration clause creating a specific form of (company) arbitration. Whenever the arbitral clause is applicable to the validity of shareholders’ resolutions, the arbitrators may suspend the effects of the resolution for  some time.
  • The arbitrary agreement has to be made in writing and can cover future disputes, or disputes that have already taken place between two parties.
  • Arbitrators can be chosen by the parties themselves, but the number of arbitrators must be odd.

Litigation

  • Normal litigation period is ten years. However, depending on the contract types, the period can be much shorter.
  • Foreign lawyers are accepted in courts if their qualifications are recognised under EU law.
  • Although theoretically applicable, third party funding for litigation is not common.
  • Insurance can cover legal expenses.

Expanding to Italy can be challenging. It is advisable to research thoroughly, understand the culture, legal system, and market entry to optimize the outcomes of your strategy.

This entry in Europe was updated on September 24, 2016 by specialist.