A Practical Guide under Italian Law
In international contracts, the governing law clauses plays a crucial role. They determine which legal system will govern the agreement in case of disputes, performance issues, or interpretative doubts.
This article provides a short practical overview of how to draft and apply governing law clauses in international contracts involving Italy. We cover what qualifies as an international contract, the validity of the clause under Italian law, what happens when no law is chosen, and when the 1980 Vienna Convention (CISG) applies automatically.
What is an international contract?
A contract is considered international when it presents connections to more than one legal system. This may occur when:
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the parties are based in different countries;
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the place of performance differs from the place of conclusion;
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the subject matter of the contract involves cross-border movement.
Even one international element is enough to trigger the application of Italian private international law (Law No. 218/1995) and EU Regulation Rome I (Reg. 593/2008).
Why a governing law clause is essential
Including a governing law clause offers key advantages:
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Legal certainty in case of disputes;
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Predictability of applicable rules for performance, interpretation and liability;
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Avoidance of costly litigation over conflict-of-law issues;
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Strategic leverage if the chosen law is that of the drafting party’s country.
Without this clause, courts will apply default conflict rules, which may lead to unexpected or less favourable outcomes.
Validity under Italian law
Under EU Regulation Rome I, parties are free to choose the law governing their contract, as long as:
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the choice is clearly expressed, or
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it is clearly implied from the terms of the contract or the circumstances.
Article 57 of Italian Law 218/1995 incorporates this principle even when the contract involves non-EU countries.
Mandatory limitations
However, certain rules prevail regardless of the parties’ choice:
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Overriding mandatory provisions of Italian or foreign law;
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Public policy (ordre public) of the forum State;
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Special protection rules for consumers, employees and insurance policyholders, which cannot be waived by contract.
How to draft effective governing law clauses
To ensure enforceability and clarity, use precise and complete wording. For example:
“This Agreement shall be governed by and construed in accordance with the laws of the Republic of Italy, excluding its conflict of law rules and the United Nations Convention on Contracts for the International Sale of Goods (CISG).”
Drafting tips:
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Clearly specify the applicable law;
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Indicate whether the CISG or other uniform laws are included or excluded;
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Align the clause with any jurisdiction or arbitration provisions;
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In multilingual contracts, define the prevailing version;
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Consider a “static reference” clause (e.g. “laws as in force on the date of execution”) for legal certainty.
What happens if no law is chosen?
If the parties do not select a governing law, default rules under Rome I apply:
- The applicable law shall be based upon the nature of the contract; or
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The contract will be governed by the law of the country of the party performing the characteristic performance;
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Exceptionally, the contract is governed by the law of the country with which it is most closely connected.
In all cases, the absence of a choice increases the risk of litigation and unpredictability.
When Italian law applies: beware of the CISG
If Italian law ends up governing the contract (either by choice or default), the United Nations Convention on Contracts for the International Sale of Goods (CISG) may automatically apply.
Italy is a signatory to the CISG, so it applies when:
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the parties have their places of business in different CISG member countries;
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the contract concerns the sale of goods (unless excluded).
To exclude the CISG, the parties must do so expressly, e.g.:
“This contract is governed by Italian law, with the exclusion of the CISG.”
If no exclusion is made, the CISG will apply by default — even if it is not mentioned.
Depending on the context, the CISG may benefit the seller (often the Italian party), but in certain industries or sectors, parties may prefer to rely on domestic law provisions instead.
Key recommendations
If you are drafting or negotiating a contract with a foreign counterpart:
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Include a clear and valid governing law clause;
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Coordinate it with jurisdiction or arbitration clauses;
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Carefully evaluate whether to include or exclude the CISG;
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If the applicable is the Italian law, identify and comply with any mandatory rules of Italian law (e.g. anti-bribery, sanctions, export control).
A well-drafted clause not only reduces legal risk — it also positions you for stronger, more efficient negotiation.
Conclusion
A governing law clause is not a formality — it’s a fundamental tool to manage risk, reduce cost, and ensure legal certainty in international transactions.
Our law firm regularly assists foreign companies and international law firms with contract drafting, review, and negotiation under Italian law. We provide legal advice in both Italian and English, with a focus on clarity, enforceability, and cross-border strategy.
Need help with a contract involving Italian law?
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Disclaimer
The content of this article is provided for informational purposes only and does not constitute legal advice, nor does it establish an attorney-client relationship. While every effort has been made to ensure the accuracy of the information herein, laws and regulations may change, and their application may vary depending on specific circumstances. Readers are strongly advised to seek independent legal advice before making any decisions based on this content. For personalized legal assistance, please contact our firm directly.