Italy

In recent years, sustainability has moved from a voluntary commitment to a core element of corporate governance, particularly in the fashion industry. As global supply chains face increasing scrutiny, contractual sustainability clauses have emerged as key legal tools to ensure compliance with environmental standards and the protection of human rights. These provisions not only mitigate legal and reputational risks but also promote more responsible and ethical production models. Sustainability clauses are typically included in commercial agreements—especially supplier contracts—and impose obligations relating to environmental protection, labour conditions, and ethical practices. Suppliers are often required to comply with internationally recognised standards, including fair wages, safe working conditions, and prohibitions on child and forced labour, in line with frameworks such as ILO standards, the UN Global Compact, the OECD Guidelines, and the UN Guiding Principles on Business and Human Rights. Their relevance is particularly evident in the fashion sector, where production is frequently outsourced to jurisdictions with varying regulatory standards. In this context, contractual clauses allow companies to extend their sustainability commitments throughout the supply chain, transforming ethical expectations into legally enforceable obligations. A central function of these clauses is the protection of human rights. By embedding human rights standards into contracts, companies can hold suppliers accountable for violations. Typical provisions include audit rights, reporting obligations, and termination clauses in cases of non-compliance. For example, suppliers may be required to submit periodic reports, allow third-party inspections, and implement corrective action plans where breaches are identified. In more serious cases, contracts may provide for termination where violations—such as child labour—are not remedied within a specified timeframe. As a result, contracts increasingly operate as practical due diligence tools, enabling companies to identify, prevent, and address risks across their supply chains. Due Diligence vs. Audit From a legal standpoint, due diligence represents a more advanced and comprehensive approach than traditional audits. While audits function as ex post verification tools—assessing compliance at a specific point in time—due diligence entails ongoing, preventive obligations. Modern ESG and human rights frameworks require companies to continuously identify, assess, and mitigate risks across their value chains. This includes integrating risk mapping into corporate governance, adopting preventive policies, and ensuring effective remediation mechanisms. This shift has significant implications for directors’ liability. Failure to implement adequate due diligence processes may expose directors to claims for breach of their duties of care and proper management, particularly where foreseeable risks materialise into legal, financial, or reputational harm. Impact and Challenges Beyond compliance, sustainability clauses contribute to broader industry transformation. They encourage the adoption of sustainable materials, reduction of emissions, and adherence to circular economy principles. At the same time, they strengthen internal governance by improving risk management, transparency, and board-level oversight of ESG issues. However, challenges remain. Enforcement can be difficult, particularly in jurisdictions with weak regulatory systems. Audits may be costly and not always effective, especially where suppliers lack transparency. Additionally, there is a risk of disproportionate burden on smaller suppliers, raising concerns about fairness and the need for more collaborative, capacity-building approaches. Looking Ahead Sustainability clauses are expected to play an increasingly central role, driven by emerging mandatory due diligence regulations. At the same time, technological solutions—such as blockchain and digital traceability tools—are enhancing supply chain transparency and improving monitoring and enforcement. Conclusion Sustainability clauses are no longer ancillary provisions but key instruments of corporate governance and risk management. They reflect a broader shift in which contracts serve not only to allocate risk but also to enforce environmental and human rights standards across global supply chains. Their effectiveness, however, depends on their integration into robust governance systems and continuous due diligence processes. When properly implemented, they represent a powerful mechanism to promote accountability, prevent harm, and support the transition towards a more sustainable and responsible fashion industry. Edited By: Francesca Cossu

Milano, 4 Maggio 2026 – LawaL Legal & Tax Advisory annuncia la conferma del proprio Partner Paolo Comuzzi alla carica di Presidente del Collegio Sindacale di Petrovalves S.p.A.. La rinnovata nomina rappresenta un importante riconoscimento delle competenze professionali e dell’esperienza maturata da Comuzzi nel campo della governance societaria, del controllo legale dei conti e della consulenza in ambito societario e fiscale. Fondata in Italia e attiva sui mercati internazionali, Petrovalves S.p.A. è specializzata nella progettazione e produzione di valvole ad alte prestazioni destinate a settori strategici quali oil & gas, energia e industria chimica. L’azienda si distingue per l’elevato contenuto tecnologico delle proprie soluzioni, l’attenzione alla qualità e alla sicurezza, nonché per una presenza consolidata in numerosi Paesi, supportata da una rete commerciale e produttiva globale. “Questa conferma testimonia la fiducia riposta nel lavoro svolto e nella qualità del supporto professionale offerto,” ha dichiarato Paolo Comuzzi. “Continuerò a svolgere il mio incarico con il massimo impegno, contribuendo alla trasparenza e alla solidità della governance di Petrovalves.” Anche LawaL Legal & Tax Advisory esprime grande soddisfazione per il rinnovo dell’incarico, che rafforza ulteriormente il posizionamento dello studio tra i principali advisor legali e fiscali a supporto delle imprese italiane e internazionali.

Employees’ silence regarding their disability cannot justify the reduction of the damages due in case of discriminatory dismissal: once the employer’s breach has been established, the employee cannot bear the consequences of the employer’s failure to verify the existence of a disability and to initiate the dialogue required to assess reasonable accommodations. The Italian Supreme Court, with judgment no. 4623 of March 2, 2026, clarified that an employee’s silence regarding his/her disability cannot be invoked by the employer to reduce the damages due as a result of discriminatory dismissal. The case concerned a dismissal for exceeding the sickness leave (so-called “periodo di comporto”, during which the employee is entitled to keep his/her job position and the duration of which changes accordingly to each NCBA) regarding an employee affected by a disability, without the employer first verifying whether the absences were linked to that condition or initiating the dialogue required to assess possible reasonable accommodations. Although the employee had not expressly disclosed her disability, several elements known to the employer – including medical assessments declaring her unfit for night work and a previous hospitalization – could reasonably have alerted the employer to her health condition. Indeed, these circumstances constituted “warning signs” that should have led the employer to investigate whether the absences were linked to a disability and to interact with the employee to consider potential reasonable accommodations. The Turin Court of Appeal declared the dismissal null and void because it constituted indirect discrimination: applying the ordinary sickness leave threshold to a disabled employee, without taking into account the increased risk of illness associated with the disability, can result in a disadvantage for a protected group. However, the Court of Appeal limited the damages to the legal minimum of five months of salary, arguing that the employee’s silence about her disability mitigated the employer’s fault. The decision was, then, challenged by the employee before the Supreme Court. The Court recalled the principles governing contractual liability under Article 1218 of the Italian Civil Code and clarified that fault is not a constitutive element of contractual liability but simply a criterion for attributing liability for the cause that prevented performance. The minimum indemnity provided under Article 18 of the Workers’ Statute has a function comparable to a contractual penalty linked to the employer’s business risk. However, once the employer’s breach has been established, the judge cannot reduce the compensation simply by assessing the degree of fault. In the case at hand, the Turin Court of Appeal had already acknowledged that the employer could have identified the employee’s disability by exercising ordinary diligence and good faith. Having established that the employer failed to undertake the necessary checks and dialogue, it was therefore incorrect to attribute the consequences of that failure to the employee. The Supreme Court also emphasized that there is no obligation – nor even a burden – on the employee to spontaneously disclose sensitive health data. Rather, the employer must initiate a dialogue with the employee to verify whether the absences are linked to a disability and to assess possible reasonable accommodations. This employer-initiated interaction represents an essential step in the decision-making process preceding a dismissal for exceeding the sickness leave. Key Action Points for Human Resources and In-House Counsel Where the employer is aware, or could reasonably be aware, of elements suggesting a possible disability, it should verify whether sickness absences may be connected to that condition and interact with the employee to assess possible reasonable accommodations before proceeding with dismissal; Employees are not required to spontaneously disclose their disability or other sensitive health data; however, once the employer initiates the necessary dialogue, the employee may be required to cooperate in providing relevant information; When a dismissal is declared null for discrimination, the damages regime follows the principles of contractual liability: once the employer’s breach is established, the compensation cannot be reduced merely by assessing the degree of employer’s fault. By Angelo Zambelli

1) The ruling and the principle of law set forth. In its ruling of 5 February 2026 (Case C-810/24), the Court of Justice of the European Union decided against the right of pre-emption in the context of the Italian project financing mechanism, imposing the non-application of said mechanism in Public-Private Partnership procedures. More specifically, the CJEU found said mechanism, provided for by the Italian law on public procurement, which allows the promoter of the project  who was ultimately not awarded the contract at the end of the tender procedure, to obtain the contract by adapting its proposal to the conditions of the best bid, to be incompatible with the EU legislation and principles. The ruling directly concerns the provisions of the previous Article 183, paragraph 15, Legislative Decree 50/2016 (the former Code of public contracts), which gave the promoter the above-mentioned right of pre-emption, with the related obligation to reimburse, within the percentage limit thereby provided for, the expenses incurred by the original successful bidder. The actual scope of the ruling, however, does not only involve the prior Code of public contracts: in fact, its impacts are disruptive with regard to the current legislative framework, as a pre-emption mechanism is still provided for - in a comparable manner - by the current Article 193, paragraph 12, of Legislative Decree 36/2023. 2) Reasons for the decision: ex post modification of the bid and distortion of competition. On the merits, the Court of Justice identified the critical issue in the effects that the pre-emption mechanism has on competition. In fact, the right given to the promoter to adjust its bid ex post to the ranking already established gives it an advantage without providing for any counter-balancing measure to the other bidders, allowing it to intervene on its proposal when the outcome of the competition has already emerged, in violation of the principle of equal treatment between participants, which requires all of them to have the same opportunities when formulating their bids. Conversely, allowing a single operator to “optimize” its bid ex post (i.e. after gaining full knowledge of the conditions of the winner) irreparably collides with the principle of fair competition. At the same time, the Court also highlighted the possible dissuasive effect on participation (the so-called “barrier to entry”), especially for operators established in Member States that are not their States of incorporation, since the uncertainty introduced by the pre-emption mechanism affects the predictability of the outcome of the procedure and, therefore, the interest in participating in it. Furthermore, the principle of transparency, according to the CJEU, requires that the rules be clear and the results definitive. Pre-emption, on the other hand, introduces a phase of uncertainty that undermines the final nature and legal certainty of the award decision. According to the CJEU, the criticisms of the regulatory framework for project financing remain valid even with the provision that allows the original successful tenderer to obtain the reimbursement of the expenses linked to the tender procedure and the initial project creation, as this is an economic corrective measure that does not eliminate the competitive asymmetry caused by the ex post remodulation allowed only to the promoter. 3) The European context and the intervention of the Corrective Mechanism. The issue, however, arose in a context in which guarantees of compliance with the principles of impartiality and transparency in relation to national project finance regulations were already subject to attention at European level. In fact, in a letter of formal notice dated 8 October 2025, the Commission had initiated the relevant infringement procedure, pointing out persistent instances of non-compliance of the Italian legislative framework with the EU directives on public procurement, with specific regard, among other things, to the pre-emption mechanism. Indeed, with the entry into force of Legislative Decree 209/2024 (the so-called "Correttivo Appalti", which amended the Code of public contracts, Legislative Decree 36/2023), the promoter's proposal was subject to a special publicity regime, opening a period for the submission of alternative or competing proposals: the ruling, however, – by fundamentally affecting the pre-emption mechanism and calling into question its compatibility with EU law – makes this intervention, regardless of its relevance from a procedural point of view, nevertheless insufficient in itself to 'save' the mechanism. 4) Conclusions. Following the ruling in question, it will also be necessary to consider the non-application of the provision currently contained in Article 193, paragraph 12, of Legislative Decree 36/2023, as it reproduces the pre-emption mechanism declared incompatible with EU law in the ruling. In this respect, it is also worth noting that the earliest domestic decisions have already begun to extend the implications of the CJEU’s ruling to the corresponding provisions of the new Public Contracts Code. In particular, in Advisory Opinions Nos. 14/2026 and 15/2026, delivered on 26 February 2026, the Emilia-Romagna Regional Court of Auditors stated that, although the CJEU judgment formally concerned Legislative Decree No. 50/2016, the incompatibility identified by the Court stems from fundamental EU principles governing concessions that apply in the same way under Legislative Decree No. 36/2023. On an operational level, this requires Public administrations and economic operators to assess the structure of ongoing and future procedures with caution, including the high risk of litigation and the (in)stability of the award outcome. What remains to be seen is whether, and on what terms, the legislator intends to introduce alternative methods aiming at promoting private initiative mechanisms, as it is pivotal for the Italian State to utilize legislative levers to mobilize privately owned assets, as the economic interest in the investment in public infrastructures and services will play a crucial role in the future development of the Nation.   Edited by: The Administrative Law Team