Retroactive application of amended Article 2407 of the Italian Civil Code – Court of Cassation No. 1390/2026 and twin order No. 1392/2026

In its ruling no. 1390 of 22 January 2026, the Supreme Court clarified the scope of the provision in Article 2407, paragraph 2, of the Italian Civil Code, as introduced by Law 35/2025.

The court clarified that the provision doesn‘t apply to events that occurred before it entered into force on 12 April 2025.

 

The case

The court‘s ruling concerns a liability action brought by a bankruptcy receiver against directors and auditors for mismanagement and failure to supervise.

The court confirmed the joint and several liability of the auditors (Article 2407 of the Italian Civil Code) because they hadn‘t taken action in relation to grossly prejudicial transactions. The auditors failed to convene a shareholders‘ meeting to bring an action for liability or to report the matter to the court pursuant to Article 2409 of the Italian Civil Code.

 

Why does the Court of Cassation exclude retroactivity?

There have been varied rulings on the issue of retroactive application. Judges in Bari¹ and Rome² ruled in favour of retroactive application. But judges in Venice³, Brescia⁴ and Florence⁵ ruled against it.

According to the Supreme Court, it should be noted that the compensation cap isn’t a “settlement rule” but a reduction in the amount of compensation already accrued.

The court makes a clear distinction between:

• cases in which a supervening rule governs equitable settlement methods (typically non-pecuniary damage), where application to pending judgments can be discussed; and
• the case in question: pecuniary damage (emerging) from mismanagement/failure to supervise, objectively quantifiable: here, the right arises “in its entirety” with the pecuniary damage and cannot be “cut” afterwards with a legal cap.

The Court of Cassation states that:

• the right to compensation arises with the damage and the quantitative dimension is governed by the legislation in force at that time (unless there’s a clear and legitimate transitional provision); and
• applying the ceiling in paragraph 2 retroactively would be equivalent to “reducing ex post” a right that has already arisen.

The court based its decision on the constitutional principles of equal treatment, protection of legitimate expectations and legal certainty.

 

Twin order no. 1392 of 22 January 2026 issued by the Supreme Court

The position expressed in judgment no. 1390 was also reiterated in order 1392, issued on 22 January 2026. It also denied the application to ongoing proceedings for prior events, because the rule affects the substance of the right and not merely the methods of assessment.

 

The first ruling contrary to that of the Court of Cassation – The Court of Bari’s position

Despite the clear principle of law mentioned above, the first position opposing the decision of the Supreme Court has already been recorded.

On 23 January 2026 – one day after the Court of Cassation handed down judgment no. 1390 – the Court of Bari reaffirmed the retroactive application of amended Article 2407 of the Italian Civil Code.

The Civil Court of Bari ordered the directors, auditors and auditing firms of the former Banca Popolare di Bari (now BdM Banca) to pay compensation of approximately EUR122 million.

The court addressed the issue of the new provisions of Article 2407, paragraph 2, of the Italian Civil Code, which introduces a cap on the liability of auditors equal to a multiple of their annual remuneration, arguing that it also applies to pending proceedings.

According to the Court of Bari:

• Article 2407 of the Italian Civil Code is, at the very least, broadly procedural in nature, as it affects the criteria for the liquidation of damages.
• Even if classified as a substantive rule, it can still be applied to ongoing proceedings, as it’s intended to regulate the effects of the legal relationship that have not yet been exhausted.
• A distinction must be made between the event giving rise to the offence (governed by the law in force at the time of the conduct) and the assessment/liquidation of damages, which must be carried out in accordance with the law in force at the time of the decision.

Hence the conclusion that the maximum limit on compensation affects the judicial settlement phase and must be applied even without a specific exception by the parties, in accordance with the adversarial principle.

Otherwise, the court denies the retroactive applicability of the new statute of limitations, considering that an extinguishing effect occurring during the proceedings would give rise to issues of unconstitutionality.

 

Bill 1426

Article 2 of Bill No. 1426 (Amendment to Legislative Decree No. 39 of 27 January 2010 on the liability of statutory auditors and members of the board of statutory auditors in pending proceedings) provides that the provisions of Article 2407 of the Italian Civil Code apply “also to proceedings pending on the date of entry into force of this law.”

The position expressed by the Court of Cassation could therefore be superseded sooner or later by clarifying intervention by the legislator.

At present, the bill is still in the pipeline.

 

Open questions

In addition to doubts about retroactivity, other issues that aren’t covered by the latest rulings of the Supreme Court remain open.

 The amended Article 2407 of the Italian Civil Code doesn’t clarify:

• whether the ceiling for auditors refers to the remuneration received or approved; and
• whether the cap applies “per harmful event” or “cumulatively” (some interpretations consider it to apply per event).

Legislative intervention would certainly be desirable on these points.

 

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¹T. Bari, 24 April 2025.
²Court of Appeal of Rome, 15 December 2025.
³Court of Venice, 7 July 2025.
⁴Court of Brescia, 10 September 2025.
⁵Court of Appeal of Florence, 10 February 2026.