Is the German principle of “Verwirkung” applicable in Italian law? In a recent Supreme Court decision concerning lease agreements, the Italian judges addressed the issue of inactivity in enforcing a right and clarified to what extent the delay in enforcing a right may give rise to a reasonable expectation on the other party that the right has been waived by its holder and, therefore, whether there could be a breach of the “good faith” principle if the right is enforced with delay by its holder.

In a recent judgment, the Italian Supreme Court addressed an interesting issue aimed at clarifying whether the delay – or inertia – in the exercise of a right by its holder can generate a legitimate expectation on the other party that the right will no longer be exercised by its holder. Specifically, the judges clarified whether a delay in exercising the right entails a breach of the principle of good faith between the parties.

The dispute arose with regards to the lease of a property for commercial use, following the landlord’s request to terminate the lease agreement due to the tenant’s failure to pay the rent for an extended period, from 2015 to 2020. Previously to filing the claim, the landlord had never demanded the payment of the rent.

The tenant argued that the failure to demand the payment of the rent for such a long period had created in him a reasonable expectation that the rent was no longer due. In light of this, he considered the landlord’s request to be in breach of the principles of fairness and good faith, alleging an abuse of his right.

In support of his argument, the tenant referred to an institute of German jurisprudential origin, the “Verwirkung” which is connected to the waiver of the right due to the inactivity of the holder.

The principle of “Verwirkung”, which is quite widespread also in common-law systems, is part of the good faith principle according to which the missing exercise of the creditor’s right over a long period of time may give rise to a reasonable and appreciable expectation of the debtor that the right will definitively not be exercised. If the right subsequently is exercised, this could represent an abuse considering such behaviour as unfair. Consequently, any judicial protection would be refused due to the principle of contractual good faith.

The Italian Supreme Court with this decision has confirmed that the above principle is not applicable in the Italian legal system.

Indeed, although it is true that under Italian law the general principle of good faith requires both parties to act fairly, a party’s delay in exercising a right may give rise to a breach of the principle of good faith only if it results in a damage to the other party

The Supreme Court has therefore confirmed that inertia or mere delay in exercising a right cannot be automatically regarded as an intention to waive the right itself, since the delay may well be the result of unawareness, temporary impediment or other cause.

It is clear, then, that, since the Italian legal system does not recognize the “Verwirkung” principle as a general principle, the standard statute of limitations are applicable when it comes to the protection of a right. In light of the above, the Supreme Court dismissed the tenant’s claim, considering that the delay in exercising the right did not constitute a breach of good faith in the contractual relationship.