Author: Lorenzo Princivalle

Navigating the Italian Market: Opportunities, Nuances, and Legal Excellence

Expanding into the Italian market requires more than just local knowledge, but it demands a comprehensive Legal Guide to M&A and Corporate Strategy tailored to the unique dynamics of the Mediterranean business landscape. As Italy evolves into a sophisticated hub for tech innovation and high-end manufacturing, foreign investors and international partners need a team that can bridge the gap between global goals and local regulations. At Princivalle Apruzzi Danielli, we act as your strategic bridge, aligning global business goals with the intricacies of Italian corporate law to ensure seamless transactions. Here is our short Legal Guide to M&A and Corporate Strategy

1. The Heart of Italy: Navigating the SME Ecosystem

The backbone of the Emilia Romagna’s and Bologna’s area economy, is its dense network of Small and Medium Enterprises (SMEs). For a foreign entity looking at M&A, this presents a unique set of challenges and opportunities:

• Beyond the Balance Sheet: Many Italian targets are family-owned businesses with deep local roots. Successful acquisitions require navigating complex governance structures where personal trust and “soft skills” are often as critical as the financial valuation.

• Cultural Integration in M&A: Managing the transition from a founder-led company to a structured corporate environment is a delicate legal and managerial process. At Princivalle Apruzzi Danielli, we ensure that the Sales and Purchase Agreement (SPA) accounts for these nuances, protecting the buyer’s interests while ensuring business continuity.

2. Commercial Contracts: Civil Law vs. Common Law

One of the biggest hurdles for foreign entities is the transition from Common Law logic to the Italian Civil Code. Whether it’s a distribution agreement or a complex supply contract, the “hidden” rules of good faith (buona fede) and statutory warranties can significantly alter the risk profile of a deal.

Pro Tip: Don’t just translate your standard international templates. Localizing a contract for the Italian jurisdiction isn’t a formality: it’s a risk mitigation strategy.

3. Why Global Firms Partner with Princivalle Apruzzi Danielli

International law firms often need a “boots on the ground” partner in Italy who speaks the same language—both literally and professionally. Our approach at Princivalle Apruzzi Danielli is defined by:

• Efficiency: We strip away the bureaucracy to focus on deal-closing.

• Directness: We provide clear “Go/No-Go” advice rather than 50-page theoretical memos.

• Multidisciplinary Vision: From corporate restructuring to complex commercial litigation, we protect your interests at every stage of the business lifecycle.

Conclusion: Italy is Open for Business

Entering the Italian market is a strategic move that requires a blend of global vision and local precision. Whether you are a foreign corporation looking for an acquisition or a law firm seeking a reliable Italian desk, the right legal partner makes the difference between a stalled project and a successful expansion.

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How Princivalle Apruzzi Danielli Can Assist You

Our team is ready to support your cross-border operations with tailored legal solutions.

Contact us at www.padlex.com to discuss your Italian strategy.

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:

• the parties are based in different countries;

• the place of performance differs from the place of conclusion;

• 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:

• Legal certainty in case of disputes;

• Predictability of applicable rules for performance, interpretation and liability;

• Avoidance of costly litigation over conflict-of-law issues;

• 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:

• the choice is clearly expressed, or

• 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:

1. Overriding mandatory provisions of Italian or foreign law;

2. Public policy (ordre public) of the forum State;

3. 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:

• Clearly specify the applicable law;

• Indicate whether the CISG or other uniform laws are included or excluded;

• Align the clause with any jurisdiction or arbitration provisions;

• In multilingual contracts, define the prevailing version;

• 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

• The contract will be governed by the law of the country of the party performing the characteristic performance;

• 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:

• the parties have their places of business in different CISG member countries;

• 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:

• Include a clear and valid governing law clause;

• Coordinate it with jurisdiction or arbitration clauses;

• Carefully evaluate whether to include or exclude the CISG;

• 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?

Contact us for an initial consultation — we’ll be happy to assist.

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.

International legal matters

International legal matters, such as those involving parties residing in different countries or property or assets located abroad, should never be underestimated or entrusted to those lacking the experience to fully understand and manage them effectively.

Businesses face the daily challenges of international markets, importing or exporting their goods and services.

Sometimes they need assistance in incorporating companies abroad or establishing a branch office in another country. That is why they increasingly seek competent professionals in this field.

Why Princivalle Apruzzi Danielli Law Firm

At Princivalle Apruzzi Danielli, an international law firm based in Bologna, Emilia Romagna, Italy, our team includes attorneys capable of providing legal assistance with:

• drafting and negotiation of international contracts such as agency contracts, shares or property sale and purchase agreements, etc.
• international litigation
• setting up companies or branches in Italy or abroad
• international debt recovery

When legal issues cross national borders, it’s essential to rely on professionals who can provide legal advice with expertise, precision, and speed. The factors to consider differ significantly depending on whether the legal matters are domestic or have international implications.

Moreover, our lawyers are fluent in English, ensuring that language is never a barrier when handling your legal needs.

Besides being all Italian qualified lawyers – avvocati – some of our attorneys are dual qualified lawyers, being qualified as solicitors for the jurisdiction of England and Wales (non-practising).

Our international clients

Whether you are an individual entrepreneur, a startup, or an established business in sectors such as services, manufacturing, IT, or e-commerce, you can rely on our experienced professionals to provide comprehensive legal support.

Additionally, we offer full legal assistance from Italy to foreign law firms needing support for their clients in our country, ensuring seamless collaboration across borders.

Transposition of the Directive (EU) 2019/2121 in Italy

Italy has recently transposed the Directive (EU) 2019/2121 of 27 November 2019 (amending Directive (EU) 2017/1132 as regards cross-border conversions, mergers and divisions), setting forth, inter alia, the rules governing the division by separation (scissione mediante scorporo).

Forms of company division available before the transposition

Until the transposition of Directive (EU) 2019/2121, the Italian law regulated only two kinds of company division:

• Full division
• Partial division

In case of a full division (scissione totale), a company, on – usually – being dissolved without going into liquidation, transfers all its assets and liabilities to two or more recipient companies, in exchange for the issue to the members of the company being divided of securities or shares in the recipient companies.

In case of a partial division (scissione parziale), a company transfers part of its assets and liabilities to one or more recipient companies, in exchange for the issue to the members of the company being divided of securities or shares in the recipient companies, and, under certain circumstances, in the company being divided or in both the recipient companies and the company being divided.

Division by separation

When a division by separation (scissione mediante scorporo) occurs, a company being divided transfers part of its assets and liabilities to one or more newly formed recipient companies, in exchange for the issue to the company being divided of securities or shares in the recipient companies.

More in details, the new rules have been enacted by implementing the Italian Civil Code with article 2506.1, headed ‘Scissione mediante scorporo’.

Furthermore, it has been discussed whether the company being divided can assign all of its assets and liabilities to the recipient company(ies). The prevalent opinion is that only part of the assets and liabilities can be assigned, thus sticking to the literal meaning of article 2506.1: if all the assets and liabilities were transferred, the transaction should be considered a contribution in kind (conferimento).

In addition, it is important to note that recipient company(ies) have to be newly formed and cannot pre-exist the division.