In the activity of credit management, the possibility of obtaining compensation damages for delay is a fundamental topic.
The measure of interest actually obtainable on payments outstanding is more and more important in order to evaluate whether it is convenient to reach an amicable settlement and to accept a rescheduling of payment in favour of the debtor or not.
Equally, the measure of the damages which will be recognised because of the delay, cannot be overlooked with regard to the evaluation as a whole of the costs and the risks involved in commencing proceedings in order to enforce the debt or alternatively to acquire the legal possibility to write off the credit.
It must in fact be remembered that, according to the tax law of Italy and other countries, losses arising from the impossibility of recovering a debt may not be considered in balance sheets without the commencement of insolvency proceedings (see Art. 66 of Italian Testo Unico sulle Imposte Dirette); or in the alternative, according to an opinion which is growing in popularity, thanks to the "certification" by a lawyer that there are no further steps which can practically be taken with the aim of collecting that specific debt.
With regard to the rules currently in force in Italy, legal interest is practically owed in any case, and will be calculated from the date the sum was due until the effective receipt at an annual rate of 5% for the amount matured up to the 1st January 1990, and at a rate of 10% for the period thereafter. Alternatively, interest can be paid at a different rate agreed by the parties; provided that such agreement is in writing whenever the rate is higher than the legal rate referred to above.
As the relative clause is not part of the "burdensome clauses" listed by Art. 1341 (2) of the Italian Civil Code, it is sufficient that the contractual rate be provided for by the general terms and conditions unilaterally established by the party that should be paid, and that those terms could have been known if due diligence had been taken by the adhering party.
Where there are neither "preliquidated damages" clauses nor a contractually fixed interest rate, it is possible to obtain, beyond the legal interest, the additional damages which the creditor can demonstrate have arisen from the delay; and this for an amount that, in certain cases, can even be of orders of magnitude larger than the original debt (a typical example is the case of outstanding payments which have resulted in the insolvency of the creditor because of his consequent illiquidity).
Unfortunately, the previous judicial approach which automatically revalued the commercial credits to the actual value of the money, and that before proceeding with the application of legal interest, went into crisis with the introduction of the new rate of interest and it was abandoned, in the case of Italian orders of payments, by all the principal Courts, including the Court of Milan. In the case of ordinary proceedings, however, many judgements, including some very recent ones, continue to consider the obvious damage inherent in the loss of the purchasing power of money, but they recognise the creditor's right to the revaluation of the debt only "for the part possibly exceeding the rate of the legal interest". In other words, this means that for the whole time that the inflation is greater than the interest rate in force the creditor will be granted just with the revaluation of the sum owed to him; for the time that the legal interest rate in force is higher, he will be given the interest.
In international matters, apart from the fact that it is strongly advisable to define in advance by agreement the rate of the applicable interest, the relevant rules concerning outstanding payments naturally
follow the law applicable. This law, provided that there is no different agreement between the parties, within the ambit of the EEC will be that of the supplier, as the party obliged to render the "qualifying performance", according to the Rome Convention.
For the cases where the law applicable, for whatever reason, is not Italian, it could be useful to make a note of the rates of interest payable in a number of other jurisdictions. Under French law the rate is 9.69% per annum (commencing from the mise en demeure which can be effected through registered mail with requested receipt, with notary extracts from the creditor's books enclosed); under German law the level is today 4% (always commencing from the date of the Mahnung, with the exception of the case in which there is documentary evidence that the creditor has paid in the meantime higher interest). Under English law the rate is 15%; and in Spain 10% (commencing from the date of a payment claim certified by a notary).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
