The order of the Corte di Cassazione (the Italian Supreme Court) of 4th October 2017, no. 23192 has once again addressed the matter of the relevance of agreeing interest rates above the usury threshold rate when signing a loan contract.
The case arises from the application for a claim to be included in the liabilities of a company in bankruptcy. The application was filed by a banking institution for the principal of a mortgage loan and for the interest provided by the loan contract.
The presiding Judge allowed the Bank’s claim in bankruptcy for the sole principal of the loan, maintaining he could not allow the default interest, given that – as stated by the Court-appointed expert report – when the contract was signed the default interest rate exceeded the threshold rate. Therefore, since it was a case of original usury (and not of supervening usury, as maintained by the Bank) the Judge concluded, pursuant to Article 1815 of the Italian civil code, that the stipulation of the usurious default interest rate determined the gratuitous nature of the relationship and therefore no interest was granted to the Bank.
The Bank challenged the decision but the Court of Matera rejected the opposition and confirmed the statement of liabilities as set by the Judge.
The Bank then lodged an appeal before the Italian Supreme Court, having as the sole reason the “ violation and false application of Article 1815 of the [Italian] civil code and of Law no. 108/1996, as the Court wrongly stated that, for the purposes of exceeding the threshold rate, it is necessary to assess the possible usury of the default interest rate and provided that, if the usurious default interest are declared invalid, said invalidity should not affect the interest payments which do not exceed the threshold rate”.
In referring to other previous rulings on the subject, the Court clarified that “regarding loan contracts, Article 1, Law no. 108/1996, which provides the setting of a threshold rate beyond which the agreed interest must be considered usurious, concerns both the interest payments and the default interest” (as stated by the Italian Supreme Court, no. 5324/2003). Therefore, the appeal against the decision of the judge who allowed the Bank’s claim in bankruptcy for the sole principal of the loan is manifestly unfounded, due to the original usury of the interest rate. In briefly providing the reasons for its decision, the Court recalled that on the one hand Article 1815, (2) of the Italian civil code states that “if usurious interest is stipulated, the clause is void and no interest is due” and that, according to Article 1 of legislative decree of 29 December 2000, no. 394, which became Law no. 24, 28 February 2001, interest that exceeds the limit established by law at the time when they are promised or otherwise agreed, for whatever reason, regardless of the moment of payment, must be intended as usurious; on the other hand the Court recalled that it had already established that “it is known that with regard to loan agreements, Article 1 of Law no. 108 of 1996, which provides for the setting of a threshold rate beyond which the agreed interest must be considered usurious, relates to both the interest payments and the default interest (Casx-apple-data-detectors://7s. April, 4, 2003, no. 5324). It was wrong, then, for the court to consider in an apodictic way that the threshold rate had not been exceeded in the specific case, just because it would not be possible to combine the interest payments with the default interest in order to ascertain that the rate was exceeded”.
In taking a stance on what interpretation is to be given to the second paragraph of Article 1815 of the Italian civil code, the ruling contributes to heat a lively debate within the Italian case-law, leaning towards the position already expressed by some Judges on this regard.
(Francesca Greblo – francesca.greblo@studiozunarelli.com)
