Building law and regulation in Italy during Covid-19

On 22 March 2020, the Italian Government introduced measures intended to contain and manage the COVID-19 epidemiological emergency.

As a general rule, through the Prime Ministerial Decree on 22nd March 2020 (hereinafter “DPCM 22nd March 2020”) the Italian Government set forth the following regulation: 

1. all the industrial and commercial activities which don’t fall with the list of essential sectors attached to the DPCM 22nd March 2020 must be suspended within and not later than 25 March 2020;
2. all the activities permitted are identified through their ATECO CODE which is a code each company has to declare either when it is incorporated or at the opening of every new local unit to the Italian Tax Authority;
3.  if a Company falls within the category of companies functional to ensure the continuity of the supply chain of the sectors referred to Annex 1 of DPCM 22 March 2020, the legal representative of the company must send the communication to the local Prefetto in order to continue carrying out its activity;
4. until the Prefetto replies to the communication authorizing or prohibiting the prosecution of the business, the activity is legitimately performed. 

With specific reference to the construction industry, it is worth noting that the sector "Civil Engineering" (ATECO CODE 42) is listed as essential sector in the DPCM 22nd March 2020 and therefore the related businesses can continue carrying their activities without the need to send any communication to the local Prefetto.

According to Italian law the following sectors are included in the "Civil Engineering" sub-sectors are included in the Civil Engineering sector:

• Construction of roads and railways;
•  Construction of Public Works;
• Construction of other Works of Civil Engineering.

Please note, pursuant to article 1, para 3 of DPCM 22nd March 2020 for those companies whose activities are not suspended, they are obliged to comply with the Protocol for measures to contain the spread of the COVID-19 virus in the workplace, as signed between the Italian government and the social partners on 14th March 2020. The above-mentioned Protocol provides some measures to be observed by the employer. In particular, among the others, the employer must:

• inform the employees to stay at home if they have 37.5° fever or other flu symptoms;
• provide all the employees with Individual Protection Disposals (surgery masks, gloves, hand sanitizer etc etc); 
• daily cleaning and periodic sanitization of the workplace;
• measure workers' fever before entering the workplace;
• smart working is strongly recommended if applicable.

If the Company does not comply with all the regulation as provided by the above-mentioned Protocol, it can be liable for lack of safety in the workplace according to the labour regulations in force.

According to art. 19 of the Law Decree n. 18 dated 17th March 2020, in case of suspension of business activity as provided in the DPCM 22nd March 2020 (please see point 1 above), the employer may apply for the so-called “CIG”, a special national funded shock absorber that reimburses salary of employees (up to a certain amount) in certain crisis conditions. Other measures may also be available, namely: (i) CIGO (i.e. ordinary redundancy fund) if the company is eligible; (ii) FIS (i.e. salary integration fund) if the company has more than 15 employees; or (iii) CIGD (i.e. special redundancy fund) provided by special laws to be enacted (and funded specifically). Furthermore, tax and social contribution reliefs have been provided for employers.

Italian Law does not provide for a definition of a force majeure event.

Usually the parties conventionally agree in their contracts a "force majeure clause" defining the events which shall fall within this definition and how they regulate the occurrence of such event. If the parties fail to agree upon a specific force majeure clause, the Italian civil code provides two general remedies which might apply when a party is prevented to perform its own obligation due to an extraordinary and unpredictable event beyond their control. 

The first remedy is set forth under article 1256 of the Italian civil code and allows a party to terminate the contract in the event the performance of its obligations became not possible for a reason not ascribable to him. 

If the impossibility is merely temporary, the party is not responsible for the delay in the performance to the extent that the impossibility persists.

According to Italian authors and case law, such impossibility may be caused by an order of the Public Authority (the so-called "factum principis") arising from general interests preventing the fulfilment of the contractual obligations. 

In particular, the Italian Supreme Court stated the entering into force of a legislative measure preventing a party to market its products may be invoked for the purpose of the above-mentioned "impossibility to perform the contractual obligations".

The situation arisen as a result of the  COVID-19 is clearly different and the absence of specific precedents in this field imposes the interpreters to verify on a case by case basis whether the measures adopted by the Italian government actually make it impossible for a party to fulfil its obligation and, if so, if the impossibility is final or merely temporary.

In this term, the Italian law decree no. 18 of 17th March 2020 (Cura Italia Decree) expressly states that "Compliance with the containment measures set forth in this decree is always assessed for the purposes of excluding, pursuant to and for the purposes of articles 1218 and 1223 of the Italian Civil Code, the debtor's liability, also with regard to the application of any forfeiture or penalties connected with delayed or lacking performance".

The second remedy is set forth under article 1256 of the Italian civil code and allows a party to request the termination of the contract in the event the performance of the obligation has become excessively onerous, due to extraordinary and unpredictable events which are beyond his control. This article may also be invoked to request the other party to renegotiate the contract for hardship.

It is worth noting that in both cases the occurrence of the event preventing a party to perform its own obligation should be immediately notified to the other party.

The pandemic of COVID-19 does not give rise itself to termination rights. As mentioned above, the existence of such rights will be dependent on the terms of contract. If the contract does not expressly provide for a force majeure clause, according to Italian Law the party might request the termination of the contract either invoking that 1) the measures adopted by the Italian government to contain the COVID-19 epidemiological emergency made it impossible for that party to fulfil its obligations, irrespective of its conduct, or 2) the performance of that party's obligations has become excessively onerous as a consequence of the Epidemic. Of course, the burden of prove is allocated to the party which requests the termination of the contract.

Art. 91 of the Cura Italia Law Decree excludes the debtor's liability which is caused by the suspension of activities imposed by the Italian regulation. Further rights deriving from a delay/impossibility of performance caused by the COVID-19 regulation (including for instance compensation for additional costs incurred as a result of the change) will be dependent on the terms of the contract.