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30 November 2001
The Usury Law provides that, when determining active interest rates, banks and other financial institutions that lend money must observe a capped rate as stipulated in the Usury Law. This rate is determined on the basis of the 'effective medium global rate', which is calculated every three months by the minister of economy and published in a ministerial decree. If the interest rate established by a lender exceeds the effective medium global rate, the Civil Code provides that no interests will fall due.
However, the Court of Appeal of Milan's decision is in conflict with other Supreme Court decisions delivered in April and November 2000, in which the court held that the Usury Law applies to all contracts under performance at the moment of its enforcement, notwithstanding the date of their execution.
In response to this confusion over the law's enforcement, the Italian government issued Interpretative Decree 394, dated December 29 2000, to confirm the Supreme Court's February 2000 ruling asserting the non-applicability of the Usury Law to interest rates agreed before the law took effect. However, in January 2002 the dispute was submitted to the Constitutional Court in order to verify whether this interpretative decree is unconstitutional and therefore void.
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