Italian law distinguishes prescrizione (id est limitation of time period) from decadenza (id est time bar).<\/p>\n
Prescrizione is relevant to insurance and reinsurance claims. It governs the limitation period within which a recovery action can be exercised to avoid the claim becoming subject to a time bar defence.<\/p>\n
Decadenza is ruled out byanother body of rules, which may operate rather differently to Prescrizione.<\/p>\n
The parties cannot deviate from the prescrizione regime, because is of public policy and its operation is mandatory.<\/p>\n
Prescrizione defences must be raised by the opponent and cannot be found ex officio by the Judge or the Arbitrator otherwise the judgment or award may be repealed.<\/p>\n
Under Italian law a time barred claim is unenforceable whilst prescrizione (once expired and, unless waived after the expiry) extinguishes the right of the party who failed to protect it.<\/p>\n
The “setting off” of reciprocal obligations, meaning claims arising out of the same contract or a closely related contract, falls within Arts. 1241, 1242 and 1243 Italian Civil Code and can be pleaded as a defence only by someone who has rights against the claimant arising out of the same contract or a closely related contract.<\/p>\n
The Italian Supreme Court held [1] that the defendant may only assert a claim by way of set-off where his claim is against the claimant and arises out of the same relationship which gives rise to the claim made by the claimant.<\/p>\n
In the matter of reinsurance, art. 1931 of the It. Civil Code provides that if the cedant\/reinsured company or the reinsurer go bankrupt reciprocal debts and credits as ascertained at the end of the insolvency proceedings are mutually set-off even if they pertain to various reinsurance contracts. The provision is far from clear and the commentators [2] maintain that Art. 1931 entails a sort of final adjustment (different from the setting-off as defined under Art. 1241 It. Civil Code) allowing certain losses, premiums and reserves to be processed and then finally adjusted not from their co-existence as provided for under Art. 1241 but only at the end of the insolvency proceedings.<\/p>\n
Unless the reinsurance contract provides to the contrary, pre-payment by the reassured of the indemnity due by him to his insured is not deemed to be a pre-condition triggering the reinsurers’ obligation to pay. (see Art. 1930 and 1931 Civil Code)<\/p>\n
The setting-off (compensazione in Italian) is compatible with Art. 56 of the Italian bankruptcy law. Insolvency is now regulated in the European Community under the directive no. 1346\/2000 of May 29th 2000.<\/p>\n
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[1] Cass. 5.VI.1976 n. 2037.<\/p>\n
[2] Le Assicurazioni \u2013 2007 \u2013 page 441.<\/p>\n