This article provides an overview of recent Italian case law concerning interest rate swaps (IRSs), the circumstances in which Italian courts have declared IRSs invalid and the practical considerations of each judicial decision.

This article also refers to the Court of Appeal of Milan's recent decision, which requires parties to assume their obligations rationally and places an obligation on banks/financial institutions to ensure that all crucial financial and legal information is disclosed and understood. The case also deals with other issues such as hidden costs, mark-to-market and section 21 of the Italian Financial Act (IFA).

This article is part of the multi-jurisdictional guide to capital markets law. For a full list of jurisdictional Q&As visit www.practicallaw.com/capitalmarkets-mjg.