Nearly six years after the Italian Supreme Court’s Joint Chambers delivered judgment No. 8770 of 2020, the First Civil Division has returned to the validity requirements of hedging IRSs. Although the Court introduces a number of significant and persuasive clarifications – most notably, by moving away from a one-size-fits-all understanding of derivatives and from the notion that probabilistic scenarios perform a predictive function – it still falls short of abandoning the interpretative approach that equates an IRS, even when used for hedging purposes, with a speculative bargain deserving legal protection only where the risk assumed may be regarded as rational. This, in turn, leads the Court to import into its analysis of contractual validity categories – such as probabilistic scenarios based on historical performance – that are technically ill-suited to IRSs, particularly in the context of hedging transaction.
