The Derivative Contracts’ Saga involving Italian Public Authorities between Domestic Law and Private International Law

Abstract

The article examines the complex evolution of derivative contracts entered into by Italian territorial public authorities, with particular attention to the impact of recent regulatory and judicial developments on the transnational litigation that arose in the aftermath of Brexit. Beginning with the domestic regulatory framework, the analysis traces the progressive narrowing of the conditions under which such derivatives are deemed valid, in light of constitutional principles of budgetary balance, sound financial management, and limits on the indebtedness of local authorities. Against this background, the paper focuses on key issues of private international law faced by Italian courts when assessing the derogatory effect of forum selection clauses contained in ISDA Master Agreements, as well as the recognition and enforcement of decisions rendered by English courts in this field. It argues that the constitutional principles underpinning the Italian legal regime governing derivative contracts are capable of shaping the content of international public policy before Italian courts. The article concludes with a critical assessment of approaches favoring the recognition in Italy of English jurisdictional decisions, highlighting the undue interference such solutions may produce with the exercise of the Kompetenz-Kompetenz of the Italian court first seized.