In May 2012 Prof. Monti expressed the government’s commitment to implement the EU Directive 2011/7/UE on late payments in commercial transactions in advance. In line with the statement made in May, in November 2012 the Legislative Decree no. 192 was adopted by the technocratic government led by Prof. Monti. It must be stressed that Italy has been among the first EU countries to implement the EU Directive.

The measure provides for new rules which apply not only to commercial transactions between private parties but also to supply agreements and contracts with Public Administrations. It results in a strong move towards legal certainty in commercial relationship between private companies and public bodies. This is good news especially for enterprises and business which usually deal with breach of contractual terms of payment by public bodies.

In particular, according to the Legislative Decree, Italian public entities are required to pay any performance related to supply agreements and contracts within 30 days. Such general terms are mandatory. Moreover, any contractual provision by which the parties seek to establish a longer term is void. As to the public health sector, where public entities usually deal with very precarious financial conditions, such term is delayed up to 60 days.

In case of default simply resulting from the expiration of such terms, public entities shall pay in addition a default yearly interest equal to the rate established from time to time by the European Central Bank plus 8%. The 8% increase in the yearly interest rate is a strong incentive for public bodies to quickly reform their accounts and payments procedure.

The new rules apply to transactions entered into as of the 1st January of this year. We therefore recommend that companies discuss with their trusted lawyers any claim for credits against public bodies which may arise as from the above mentioned term. The reason is that there are specific circumstances under which the general terms of payments may be delayed. Moreover, there are general rules that apply every time an enforcement order has to be executed against public bodies.