Over recent years in Italy, derivatives and, thus, amongst them, the interest rate swaps (IRSs) over the counter (OTC), have played a leading role in extensive litigation between investors-customers (in deep debt) and banks, offering a constantly evolving and attractive ‘laboratory of elucidations’ (and attempted solutions). Italian law scholars and case law have had to cope with a mare magnum of legal problems raised by the aforesaid financial instruments that were formulated in foreign systems and then imported into our legal system, through the well-known process of legal transplant, not always conceived with the necessary compatibility with the national legal system. Italian legal doctrine has studied the problem of the applicability of the ‘excessive onerousness’ remedy to IRS contracts and, more in general, to derivatives. Despite the fact that there are different lines of thought that are in contrast amongst each other, since a part of the doctrine defines derivative agreements as aleatory, whilst others define them as commutative contracts, the operational outcome is not different, due to the fact that the absolute majority of law scholars agreed that the remedy of termination of contract for excessive onerousness may not apply in the event of IRSs. In the legal ‘toolbox’ of Italian lawyers, the instrument offered in order to protect investors has not been the remedy of excessive onerousness, but mainly the remedies against the intermediary’s breach of the conduct obligations provided for by the laws and regulations. The article analysis shows that Italian case law on IRSs contracts is constantly evolving. The available ‘toolbox’ of instruments offered in order to protect investors is fairly numerous: the nullity due to a lack of ‘causa’ or ‘concreta causa’, the awarding of pre-contractual or contractual damages, or the voidability of the contract due to an error, mistake or conflict of interests between the intermediaries and the investors or to the termination for breach (with all the consequent effects in damages or restitution). In any case, it should not be forgotten that, in the financial sector, the protection of the weakest party involves the general economic system, the allocation of savings and the efficacy of the overall financial markets.

Interest Rate Swaps' Contract and 'Excessive Onerousness' : an Italian Viewpoint / R.E. Cerchia. - In: EUROPEAN REVIEW OF PRIVATE LAW. - ISSN 0928-9801. - 23:1(2015 Jan), pp. 121-132.

Interest Rate Swaps' Contract and 'Excessive Onerousness' : an Italian Viewpoint

R.E. Cerchia
Primo
2015

Abstract

Over recent years in Italy, derivatives and, thus, amongst them, the interest rate swaps (IRSs) over the counter (OTC), have played a leading role in extensive litigation between investors-customers (in deep debt) and banks, offering a constantly evolving and attractive ‘laboratory of elucidations’ (and attempted solutions). Italian law scholars and case law have had to cope with a mare magnum of legal problems raised by the aforesaid financial instruments that were formulated in foreign systems and then imported into our legal system, through the well-known process of legal transplant, not always conceived with the necessary compatibility with the national legal system. Italian legal doctrine has studied the problem of the applicability of the ‘excessive onerousness’ remedy to IRS contracts and, more in general, to derivatives. Despite the fact that there are different lines of thought that are in contrast amongst each other, since a part of the doctrine defines derivative agreements as aleatory, whilst others define them as commutative contracts, the operational outcome is not different, due to the fact that the absolute majority of law scholars agreed that the remedy of termination of contract for excessive onerousness may not apply in the event of IRSs. In the legal ‘toolbox’ of Italian lawyers, the instrument offered in order to protect investors has not been the remedy of excessive onerousness, but mainly the remedies against the intermediary’s breach of the conduct obligations provided for by the laws and regulations. The article analysis shows that Italian case law on IRSs contracts is constantly evolving. The available ‘toolbox’ of instruments offered in order to protect investors is fairly numerous: the nullity due to a lack of ‘causa’ or ‘concreta causa’, the awarding of pre-contractual or contractual damages, or the voidability of the contract due to an error, mistake or conflict of interests between the intermediaries and the investors or to the termination for breach (with all the consequent effects in damages or restitution). In any case, it should not be forgotten that, in the financial sector, the protection of the weakest party involves the general economic system, the allocation of savings and the efficacy of the overall financial markets.
Excessive Onerousness; IRS contracts;
Settore IUS/02 - Diritto Privato Comparato
Settore IUS/01 - Diritto Privato
gen-2015
http://www.kluwerlawonline.com/document.php?id=ERPL2015009
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