Jurisdiction and Applicable Law in Cross-Border Contracts with Italian Parties

When a foreign company enters into a contract with an Italian counterparty, two fundamental questions arise immediately: which law governs the contract, and which court has jurisdiction to decide any disputes? The applicable law determines the rules governing the contract’s validity, interpretation, and breach; jurisdiction determines where and how any litigation will take place.

In the European context, these questions are answered primarily by two EU Regulations: the Rome I Regulation (Reg. EC 593/2008) on the law applicable to contractual obligations, and the Brussels I bis Regulation (Reg. EU 1215/2012) on jurisdiction. This guide explains how these two instruments work in the practice of commercial contracts with Italian parties. For a broader overview of Italian commercial contracts: Commercial Contracts in Italy: What Foreign Companies Need to Know.

Applicable Law: The Rome I Regulation

The Rome I Regulation applies to contractual obligations in civil and commercial matters where there is a conflict of laws — that is, where a contract has connecting factors with more than one country. It applies throughout the EU (with the exception of Denmark) and takes precedence over national private international law rules. The Regulation may apply even where both parties share the same nationality, provided the contract contains a foreign element.

Freedom of Choice of Law (Art. 3 Rome I)

The fundamental principle of the Rome I Regulation is freedom of choice of law: the parties may freely choose the law applicable to their contract (Art. 3). The choice must be express or must be clearly demonstrated by the terms of the contract or the circumstances of the case. A generic reference to “international principles” or “market practice” is insufficient — the choice must identify a specific national legal system.

The choice of law may be partial (limited to certain clauses) and may be amended by agreement at any time, without prejudice to the rights of third parties.

Freedom of choice of law — CJEU, judgment no. 671/2023: the freedom of choice under Art. 3 Rome I is the central criterion of the system; the choice must be express or clearly deducible from the contract or the circumstances of the case. The Regulation may apply even between parties of the same nationality where the contract contains a foreign element.

Applicable Law in the Absence of Choice (Art. 4 Rome I)

Where the parties have not chosen the applicable law, the Rome I Regulation identifies it on the basis of objective criteria that vary according to the type of contract:

• Sale of goods contracts — law of the country where the seller has their habitual residence.
• Service contracts — law of the country where the service provider has their habitual residence.
• Franchise contracts — law of the country where the franchisee has their habitual residence.
• Distribution contracts — law of the country where the distributor has their habitual residence.
• Agency contracts — law of the country where the agent has their habitual residence (Art. 4(1)(b)).
• Contracts relating to rights in rem in immovable property — law of the country where the property is situated.

For complex contracts or those that do not fall within the typified categories, the law of the country with which the contract is most closely connected applies — presumptively the country of the party who is required to effect the characteristic performance (Art. 4(2) Rome I). A general escape clause (Art. 4(3) Rome I) allows the law of a different country to be applied where it is clear from all the circumstances that the contract is manifestly more closely connected with that other country. The presumptive criteria must be taken seriously and may be displaced only where there are clearly prevailing connecting factors pointing elsewhere.

Limits on Freedom of Choice: Overriding Mandatory Provisions and Public Policy

Freedom of choice of law is not unlimited. Two categories of rules apply regardless of the law chosen by the parties:

• Overriding mandatory provisions (Art. 9 Rome I): rules whose observance a country regards as crucial for safeguarding its public, political, economic, or social interests. In Italy, typical examples include the mandatory protective rules for commercial agents (Art. 1751 c.c. and Legislative Decree no. 65/1999), consumer protection rules, and competition law.
• Public policy of the forum (Art. 21 Rome I): a court may refuse to apply a provision of a foreign law chosen by the parties if its application would be manifestly incompatible with the public policy of the forum. This is a residual safeguard, applied in exceptional cases.

For commercial agency, the principle is particularly significant: the CJEU has held that the provisions on agent termination indemnity and compensation apply where the agent has carried out their activity in a Member State, even where the principal is established in a third country and the contract designates that country’s law. The choice of law cannot be used to evade the agent’s mandatory protections where the relationship has a close connection with the EU market.

Mandatory rules in agency — CJEU, Ingmar judgment no. 605/2000: the EU rules on agent indemnity and compensation (Arts. 17–18, Dir. 86/653/EEC) apply even where the principal is established in a third country and the contract is governed by that country’s law, provided the agent carried out their activity in a Member State. This must be read alongside Art. 1751 c.c., which expressly states that the provision is non-waivable to the agent’s detriment.

For a full treatment of the agent’s mandatory protections under Italian law: Agency and Distribution Agreements in Italy: A Legal Guide.

Jurisdiction: The Brussels I bis Regulation

The Brussels I bis Regulation governs jurisdiction and the recognition and enforcement of judgments in civil and commercial matters among EU Member States. It applies where the defendant is domiciled in a Member State or where the parties have concluded a valid jurisdiction agreement.

The General Rule: Defendant’s Domicile (Art. 4 Brussels I bis)

The general rule is that persons domiciled in a Member State may be sued before the courts of that State, regardless of their nationality. An Italian company may therefore be sued before the Italian courts; a foreign company domiciled in Italy may be sued in the same way.

Where the defendant is not domiciled in a Member State, jurisdiction is normally determined by the national law of the Member State of the court seised, subject to the rules on exclusive jurisdiction and valid jurisdiction agreements under the Regulation. The forum of a branch, agency, or other establishment covers disputes relating to the operations of that establishment — not any dispute against the company at large.

Alternative Grounds of Jurisdiction in Contract Disputes (Art. 7 Brussels I bis)

In contractual matters, the claimant may choose between the courts of the defendant’s domicile and the courts of the place where the contractual obligation in dispute was performed or is to be performed (Art. 7(1)). For the main contract types, the Regulation autonomously identifies the place of performance:

• Sale of goods contracts: the relevant place of delivery must be identified first on the basis of the contractual provisions and any trade usages incorporated by reference, including Incoterms. Only where the contract does not allow the place of delivery to be identified does the place of the actual final delivery become relevant.
• Service contracts: the place where the services were or should have been provided under the contract.

For agency contracts, the agent’s domicile does not automatically determine the place of the principal service. Where the contract identifies a territorial zone of operations, that zone is the primary criterion for identifying the main place of service provision; the agent’s domicile is relevant only as a secondary criterion.

Place of delivery in sales — CJEU, judgment no. 375/2011: the relevant place of delivery under Art. 7 Brussels I bis must be identified first on the basis of the contractual provisions and incorporated trade usages (including Incoterms); the place of actual final delivery is relevant only as a last resort. Agency contracts — Cass. civ., Full Court (Sezioni Unite), order no. 25588/2026: for identifying jurisdiction in agency disputes, the court must look first at the territorial zone assigned to the agent where contractually determined; the agent’s domicile is relevant only as a secondary criterion.

Jurisdiction Agreements (Choice of Court Clauses) — Art. 25 Brussels I bis

The parties may derogate from the statutory grounds of jurisdiction and confer exclusive jurisdiction on the courts of a Member State through a jurisdiction agreement (choice of court clause) (Art. 25 Brussels I bis). The formal requirements are:

• The clause must be in writing or evidenced in writing, or in a form that accords with practices which the parties have established between themselves.
• In a form which accords with a usage in international trade or commerce of which the parties are or ought to have been aware.
• It must unambiguously identify the courts of a Member State.

In B2B relationships, the jurisdiction clause is valid where the parties’ consent is established by one of the forms required by Art. 25. Mere inclusion of the clause in general terms and conditions is not sufficient if those terms are only referred to in invoices or subsequent documents; it is however possible for the contract to expressly incorporate general terms that were accessible before the contract was concluded, provided the text was available for consultation and could be saved on a durable medium.

The validity of the clause does not depend on the existence of a substantive connection between the contractual relationship and the Member State whose courts have been chosen. The CJEU has recognised that Art. 25 Brussels I bis may apply even where both parties are domiciled in the same Member State and designate the courts of another Member State — and even where both parties are domiciled in a third country and choose the courts of a Member State.

The substantive validity of the clause is governed by the law of the Member State whose courts have been designated. As regards enforceability against third parties — for example, a holder of a bill of lading — this depends on the national law applicable to the underlying relationship and the legal position acquired by the third party, not automatically on the lex fori.

A valid jurisdiction agreement is in principle exclusive: only the designated courts have jurisdiction, and any other court must declare itself without jurisdiction. The parties may however expressly provide that the agreement is non-exclusive.

Jurisdiction clause and general terms — CJEU, Saey Home & Garden, judgment no. 173/2018: mere reference to general terms in invoices is not sufficient for a valid jurisdiction clause; the reference must be express and the terms must have been accessible before the contract was concluded. Cass. civ., Full Court, order no. 21622/2017: for clauses concluded online, the written form requirement is met where the text was available before conclusion and capable of being saved on a durable medium. No substantive connection required — CJEU, judgment no. 123/2024: Art. 25 Brussels I bis may apply even where both parties are established in the same Member State and choose the courts of another, without any additional connecting factor being required. CJEU, judgment no. 766/2025: applicable also where both parties are domiciled in a third country and choose the courts of a Member State.

Jurisdiction Clauses in Agency Contracts: A Specific Regime

For agency contracts, the rules on choice of court must be distinguished depending on whether the chosen forum belongs to an EU Member State or not.

As regards the termination indemnity under Art. 1751 c.c., the Italian Court of Cassation sitting in Full Court has held invalid any derogation of Italian jurisdiction in favour of a non-EU court or arbitration, on the ground that the right protected by the Italian provision is non-waivable. This does not, however, amount to a general exclusion of the validity of jurisdiction clauses in favour of the courts of another EU Member State.

A further distinction must be drawn between the applicable law question and the jurisdiction question: the mandatory nature of certain Italian substantive rules (such as Art. 1751 c.c.) operates at the level of applicable law and does not, in itself, preclude a jurisdiction agreement in favour of the courts of another Member State under Art. 25 Brussels I bis.

Agency and non-EU forum — Cass. civ., Full Court, order no. 21657/2025: a derogation of Italian jurisdiction in favour of a non-EU court or arbitration for disputes concerning the Art. 1751 c.c. indemnity is invalid, given the non-waivable nature of that right; the decision does not generally exclude the validity of jurisdiction clauses in favour of the courts of a Member State. Internal jurisdiction vs. international jurisdiction — Cass. civ., Full Court, order no. 21663/2025: the mandatory nature of Art. 413 c.p.c. operates at the level of Italian domestic jurisdiction and does not, in itself, preclude a jurisdiction agreement under Art. 25 Brussels I bis.

Arbitration as an Alternative to State Courts

The parties may exclude state court jurisdiction and refer disputes to an arbitral tribunal through an arbitration clause in the contract. Arbitration falls outside the scope of the Brussels I bis Regulation (Art. 1(2)(d)): it is governed by the 1958 New York Convention and national arbitration laws. This exclusion does not, however, eliminate state court oversight of the validity of the arbitration agreement, the arbitrators’ jurisdiction, and the recognition or enforcement of the award.

The principal advantages of international arbitration are: recognition and enforceability of the award in over 170 countries party to the New York Convention; neutrality and confidentiality of the proceedings; and flexibility in the choice of seat, language, procedural rules, and number of arbitrators. The principal disadvantages are cost (often higher than court proceedings for medium-to-low-value disputes) and timescale.

Recognition and enforcement of the award depend primarily on the seat of the arbitration, the country where enforcement is sought, and the New York Convention — not on the administering institution. For international disputes with Italian counterparties, the most widely used institutions are the National and International Arbitration Chamber of Milan (CAM), particularly appropriate where enforcement will take place primarily in Italy, and the ICC International Court of Arbitration in Paris for disputes where enforcement may be required in multiple countries.

Practical Advice for Drafting Contracts

• Always include a choice of law clause: the clause must be specific (e.g. “this contract is governed by Italian law”), not generic. It eliminates uncertainty about the applicable law and prevents preliminary disputes on the point.
• Align the choice of law with the choice of forum: logically consistent combinations (Italian law and Italian courts; English law and London arbitration) avoid having the designated court apply a foreign law with which it is not familiar.
• Consider overriding mandatory provisions: before choosing a foreign law, check whether the contract is subject to Italian mandatory rules that will apply regardless — agency law, competition law, consumer protection rules.
• Draft the jurisdiction clause in express and clear terms: the clause must unambiguously identify the competent courts (e.g. “the Courts of Milan shall have exclusive jurisdiction”), appear in the main body of the contract, and — if included in general terms — be accessible before the contract is concluded and capable of being saved on a durable medium.
• Consider arbitration for high-value contracts: for contracts with non-EU counterparties where enforcement of a foreign judgment might be problematic, international arbitration offers significant advantages in terms of award recognition under the New York Convention.

Frequently Asked Questions

Our contract with an Italian company chooses English law. Do Italian rules still apply?

In principle, the choice of English law is valid under the Rome I Regulation. However, certain Italian overriding mandatory provisions apply regardless: in particular, the mandatory protective rules for commercial agents (Art. 1751 c.c.) where the agent operates in Italy, Italian and EU competition law, and certain consumer protection rules. The CJEU has confirmed that this protection applies even where the principal is established outside the EU.

We have an exclusive Italian jurisdiction clause in our contract. Can the foreign counterparty sue in their home country?

If the jurisdiction agreement is valid under Art. 25 Brussels I bis (in writing, unambiguous identification of the forum, accessible before conclusion of the contract), the Italian courts have exclusive jurisdiction. A counterparty domiciled in an EU country cannot bring proceedings before its home courts — any EU court other than the one designated must declare itself without jurisdiction. For non-EU counterparties, the effect of the clause depends on the national rules of the counterparty’s country.

If there is no jurisdiction clause in the contract, where can we sue the Italian counterparty?

Under the Brussels I bis Regulation, you may choose between: (1) the Italian courts (defendant’s domicile, Art. 4), or (2) the courts of the country where the contractual obligation in dispute was to be performed (Art. 7(1)). For sale of goods contracts, the second criterion points to the place of delivery of the goods (determined first by the contractual provisions and Incoterms); for service contracts, to the place of service provision.

We want to include an arbitration clause. How should it be drafted?

The arbitration clause must identify: the arbitral institution (e.g. CAM Milan, ICC Paris) or the applicable procedural rules; the seat of the arbitration (which determines the lex arbitri and the review regime for the award); the language of the proceedings; and the number of arbitrators. It is important to coordinate the arbitration clause with the choice of substantive law clause. A standard institutional referral clause (e.g. “disputes shall be resolved under the Rules of the National and International Arbitration Chamber of Milan”) is generally sufficient.

Conclusion

Choice of applicable law and jurisdiction is not a bureaucratic detail in international contracts: it is a strategic decision that can determine the outcome of a dispute before the dispute even begins. The Rome I and Brussels I bis Regulations provide a predictable framework for contracts with Italian parties, but leave significant scope for party autonomy — autonomy that must be exercised with awareness, taking account of the overriding mandatory rules that apply in any event and of the formal requirements for valid jurisdiction agreements.

For assistance in drafting international contracts with Italian parties or in assessing jurisdiction and applicable law clauses, Studio Legale Giorgianni is available. Further information is available in the Italian Business Lawyer section and on our Italian Lawyer hub page.