Law No 124 of 2017 has no retroactive effect

On the continuing applicability of Article 1526 of the Civil Code, in the event of termination for non-fulfilment of a leasing contract, the Supreme Court[1], after stating that Law no. 124 of 2017 does not have retroactive effects, has recently ruled that the applicability of the latter only to leasing contracts in respect of which the assumptions of termination for non-fulfilment have occurred after its entry into force.

In particular, the case brought to the attention of the Supreme Court concerned the bankruptcy of a user whose grantor company had applied for admission as a creditor of the claim arising from the overdue and unpaid instalments of the lease agreement. The claim was rejected by the Judge on the grounds that the contractual relationship between the lessor and the lessee had been terminated prior to the declaration of bankruptcy and, therefore, the provisions of Article 1526 of the Civil Code should have been applied to the case in question.

The grantor company appealed to the Court of Cassation arguing that, following the typification of the leasing contract by Law no. 124 of 2017, the distinction between a lease at the end of which the user acquires ownership of the asset and a lease for the enjoyment of the asset should be deemed to have disappeared, with the consequent applicability to the case in question (not subject ratione temporis to Law no. 124 of 2017) of Article 72 quater of the bankruptcy law.

There was, therefore, the problem of invoking and using the discipline provided by Article 72 quater of the Bankruptcy Law and Law 124/2017 to a leasing contract whose termination had taken place in a regulatory framework that provided, instead, for the applicability of Article 1526 of the Civil Code[2].

The Supreme Court, by settling the jurisprudential contrast, deemed to give continuity to the tendency that, until the entry into force of L. 124/2017, identified leasing as a contract which was only socially typical and which was distinguished in the two figures of leasing for the enjoyment of the asset (in which the effects of termination for non-fulfilment do not extend to the services already performed and, consequently, the user is required to return the asset while the lessor is entitled to keep the instalments collected in addition to compensation for damages) and leasing at the end of which the user acquires ownership of the asset (in which termination is subject to the analogical application of Art. 1526 of the Civil Code whereby the lessee is obliged to return the asset and the lessor to return the instalments collected, having, however, the right to obtain fair compensation for the use of the asset and its depreciation in use as well as compensation for damages).

Law No. 124 of 2017, in the opinion of the Supreme Court, has provided a legal typification of the leasing contract in terms of a general and unitary case, but it is not retroactive: the new rules, therefore, cannot be applied in the past to those contracts where the conditions for termination for non-fulfilment of the lessee occurred before the entry into force of the new legislation, with the consequent inapplicability of Article 1 paragraph 138 of the law itself.

Moreover, the Supreme Court have clarified that it is not even possible to apply by analogy Article 72 quater of the Bankruptcy Law. This is, in fact, an exceptional rule which presupposes the dissolution of the contract by the Bankruptcy’s Trustee as a consequence of the user’s bankruptcy and cannot, therefore, be invoked in the case of a leasing terminated, due to the user’s default, before the user’s bankruptcy.

It follows, in conclusion, that, in the event of bankruptcy of the user, declared after the termination for non-fulfilment and before the entry into force of Law no. 124/2017, the grantor will have to formulate a complete application for the lodgment of claims and, by virtue of Article 1526 of the Civil Code, will only be able to obtain fair compensation.

 

Desiree Pasquariello

[1] The order by which the Supreme Court was seized signaled two issues of maximum importance having as their subject matter 1) the interpretation of Article 1 paragraphs 136-140 of Law 124/2017 and the possibility of abandoning the orientation that applies Article 1526 c. c. in the case of termination of the transactional lease and (2) the legitimacy of a so-called “diachronic” analogical application procedure as a result of which it is sufficient that the rule to be applied by analogy to the concrete case exists at the time of the decision (its existence not being necessary at the time of the realization of the case).

[2] There were two opposing views. According to the first, the was a distinction between a lease for the purposes of enjoyment and a lease for the purposes of transfer is still in force and the applicable rules are different: the effects of termination for non-performance of a lease for the purposes of transfer are governed by Article 1526 of the Civil Code.  The second view was inclined to value the 2017 novelty which united the regulation of the leasing contract, overcoming the distinction between a translative and a enjoyment lease and came, therefore, to the conclusion that Article 1526 of the Civil Code was no longer applicable.