The «Recovery Period Rule» in the Distribution Contracts: Some Remarks under Italian Law

The «recovery period rule» is an important issue in the commercial distribution agreements, since it refers to the protection of the specific investments which a party has made within the sphere of the contractual relationship. Under Italian law the matter is addressed in two different provisions: one is contained in the law on commercial affiliation (art. 3, paragraph 3, of law 129/2004); the other is the provision concerning the abuse of economic dependency (art. 9 of law 192/1998). Only the second provision has been applied in concrete cases, probably because it contains a wider range of remedies: (i) specific protection, represented by the distributor's right to remain in the supplier's network for the period of time necessary to amortise the investment; (ii) protection by equivalence, consisting in the payment of a specific sum of money corresponding to the prejudice suffered by the distributor. The practical experience, in fact, shows the importance of balancing accurately the applicable remedies. From a theoretical viewpoint, the choice of protecting the investment made by a party in a long term contractual relationship is not neutral: on one side, it may be justified with the need of protecting the weaker contracting party. On the other side, however, this choice implies the transfer to the other party of the risk underlying the contractual operation, and this may collide with the principle of the formal independence of the contracting parties. US literature already emphasized the risk of «overprotection» of the distributor.