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02 August 2002
The Italian Constitutional Court(1) has confirmed the legitimacy of Law Decree 394 of December 29 2000, which states that the provisions of the Usury Law (108/1996) do not apply to interest rates contained in agreements that were executed before the Usury Law came into force.
The Usury Law provides that interest rates must observe a capped rate. The
maximum allowable interest rates are determined on the basis of the 'effective
medium global rate', which is calculated every three months by the Ministry
of Economy and published in a ministerial decree. Section 1815 of the Italian
Civil Code, as modified by the Usury Law, provides that interest rates which
exceed this legal threshold are null and void.
Considerable confusion has arisen since the Usury Law does not specify whether it also applies to banking contracts that were executed before it came into force. In order to clarify this issue, on which the Italian courts have delivered conflicting rulings (for further information please see Courts Confused As to Whether Usury Law is Retroactive), Law Decree 394/2000 was introduced, confirming that the Usury Law does not have retroactive effect. However, in January 2002 the Italian Constitutional Court was requested to examine the constitutionality of this interpretative decree.
In February 2002 the Italian Constitutional Court declared that Law Decree 394/2000 is constitutionally valid. It has thus finally confirmed the non-applicability of the Usury Law to interest rates agreed before the law took effect.
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