1. Can the imposition of import tariffs be considered a force majeure event in commercial contracts?
  2. If the imposition of an import tariff does not qualify as a force majeure event, what legal options are there for parties to address the impact of these tariffs within their contractual relationships?
  3. What specific contractual provisions should a party consider including in future contracts to better manage the risk of sudden import tariffs and similar trade barriers?

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1. Can the imposition of import tariffs be considered a force majeure event in commercial contracts?

Under Italian law there is no statutory definition of force majeure, however, several provisions on parties’ obligations refer to this doctrine.  

According to relevant case law the event of force majeure must be extraordinary, unpredictable and impossible to be neutralized through any action of the party.

There is no published case law on the tariffs topic in relation to force majeure. Nevertheless, although the imposition of import tariffs can be considered an unforeseeable event that the parties cannot neutralize, it does not make the performance of the contract impossible but more onerous to the party affected by the event.

If force majeure doctrine does not apply, the remedy is the hardship rule (article 1467 civil code) provided that the supervening unbalance of the contract is serious and not falling in the range of normal contractual risk. The hardship rule entails the termination of contract but the other party could fairly renegotiate the same to avoid termination.

During the pandemic period the Supreme Court also ruled that the courts have a power to directly re-balance contract or to force the favorite party to renegotiate the contract but that principle has never been applied once the pandemic period ended.

3. What specific contractual provisions should a party consider including in future contracts to better manage the risk of sudden import tariffs and similar trade barriers?

Parties could stipulate a clause expressly providing that new/increased tariffs exceeding a certain percentage (i) constitute a force majeure event or (ii) an event entitling parties to a fair renegotiation of the contract or (iii) an event entitling parties to terminate the contract.