In recent years, discussions about usury in bank contracts have been more and more frequent; however, it is still not clear when an interest rate can be really qualified an usurious one and which are the remedies granted by the Italian legal system in order to solve this situation.

This issue is very complicated and it is subject to different interpretations, both doctrinal and jurisprudential. In order to clarify the current state of uncertainty, it is advisable to start considering the legislative background:

• Law n.108 of the 7^th March 1996 on usury, stating that the limit above which rates must be considered usurious is to be fixed at the same level as set in the Italian criminal code;
• Article 644 of the Italian Criminal Code, entitled “Usury”, stating as follows: “in order to determine the usurious rate, all commissions, remunerations of any kind and expenses connected with the credit supply must be taken into account, with the sole exclusion of taxes and duties;
• Law Decree 394/2000, issued as an authentic interpretation of the above mentioned law of 1996 stating as follows (Article 1, first para): “for the enforcement of article 644 of the criminal code and article 1815, second clause, of the civil code, those rates are considered usurious which exceed the threshold set by law at the time they are promised or anyhow agreed upon, under any title, independently from the time of payment”; moreover, the explanatory governmental report, expressly takes into account all kinds of interests due: compensation, offsetting interests, or default interests.
• Article 1815 of the Italian Civil Code, specifically dealing with loan contracts, and stating: “if usurious interest rates are agreed upon, the clause is null and void and no interest money must be paid for”.

The above reference data per se already show that the calculation of the rates must be referred to the time in which they are stipulated, independently from their actual payment. However, the jurisprudence, beside the hypothesis of outset usury (i.e. rates usurious at the time the contract is concluded) has envisaged the relevance of a supervening usury. This wording applies to two different situations: firstly, to contracts on-going at the time of entering into force of law 108/1996; secondly, to a potential need for further checks on the nature of rates originally agreed upon, following a decrease of the threshold rates.

The legal relevance of supervening usury has been the subject of many conflicting Courts decisions, resulting in two diametrically opposite positions, one favourable, the other one contrary to this legal concept. The argument in favour has been sustained, among others, by the Civil Court of Cassation (sentence n. 5286/2000), the Civil Court of Bologna (sentence of the 19/6/2011) and by the Banking and Finance Arbitrator in Roma (award of the 29/2/2012) based on the relevance of the time in which the single payments are made in order to ascertain the existence of an usury. The argument contrary to the concept of supervening usury, instead, is grounded on the assumption that the date of conclusion of the contract is the sole having relevance; therefore no subsequent check of the rates originally agreed upon is possible (sentence n. 8138/2009 of the Supreme Court; award 18/10/2011 of the Banking and Finance Arbitrator of Milan).

Another problematic aspect at issue concerns the calculation of the rate as compared to the instructions of the Ministry of Treasury, particularly in regard to the possibility of including the default rate in the calculation. Although at first sight the legislative data appear clearly favourable to the inclusion in the amount of all rates anyway agreed upon as well as of any further expenses connected with the credit supply, major contrasts have been registered on this in the issue in the jurisprudence. Initially, the Criminal Supreme Court (sentence n. 12028/2010) in accordance with the text of the law, has stated that the compensation interest rate to be compared with the threshold rate must be increased by including the default interest plus all the other expenses incurred by the debtor to exploit the credit. The decision made specific reference to the unauthorized overdraft fees, stating their relevance for the comparison. The argument has later been confirmed by a number of sentences of the Supreme Court: nn. 350, 602 and 603 of 2013.

However, in January 2014, the Civil Courts of Milan and Naples issued two ordinances providing a new interpretation of the principle which appeared to be commonly accepted so far. Although confirming the relevance of the default interests in configuring the crime of usury, the decisions exclude that such rates must be added to the compensation rates for the purpose of calculation. Indeed, the default interests (i) have an autonomous and specific function, sanctioning a breach of the loan covenants, (ii) it is not certain that they will become actual fact, and (iii) their amount is undetermined, being commensurate to the duration of delayed fulfilment. Therefore, according to these recent ordinances, the compensation and default interest rates could be cumulated only in the event of late payment and with reference to each single instalment. Anyhow, even in this case the nullity of the interest rates exceeding the usury threshold, only affects the default interest rate of each single instalment. The conclusion reached by the two decisions is, in effect, that the compensation rates, stipulated beneath the legal threshold are always due and, if paid, cannot be returned.

As to the sanctions provided by the legal system for the violation of the rate threshold, one must take into account article 1815 of the Civil Code which states the nullity of the covenants establishing interest rates beyond the legal threshold. This rule, set for the specific case of loan contracts, has been the subject of an extensive interpretation by the Court of Appeal of Venice, which, by sentence n. 342, explicitly confirmed that this sanction applies to every kind of pecuniary obligations, independently of the contract name. However, it must be pointed out that even the topic of sanctions imposed for exceeding the threshold has been the subject of contrasting judicial decisions. The Supreme Court (sentences nn. 602 and 603 of 2013) stated that, following the adoption of the threshold rate mechanism (law 108/1996), the compensation and default interest rates exceeding the usury threshold must be substituted in the relevant covenants with the rates quarterly fixed by the Ministry. As clarified by the Civil Court of Naples in a sentence issued on 16/10/2013, the compensation and default interest rates are always due (and, when paid, cannot be returned), being only subject to lowering within the threshold.

 

What reported above shows the complexity of the issue, which, also due to the plurality of legislative sources, prevented the setting of a steady and generally shared orientation. Therefore, as of today, in order to reach certain and grounded legal conclusions, the specific features of the pecuniary obligations agreed upon are of basic relevance.

 

Avv. Nicolino Gentile

Dott.ssa Nicoletta Mancusi