When does the assignment of credit not violate the financing activity reserve? Â
An airline flight is significantly delayed, the travelers transfer to a third-party company, the assignee, the right to credit compensation for the flight delay.
The case in question originates from an appeal filed by the transferee company which requested that the airline be ordered to pay the sum of €500.00, as pecuniary compensation pursuant to art. 7 of EC Regulation 261/2004, for the delay of over three hours of a direct flight from Ibiza to Milan.
The company refused to pay, arguing, for what is relevant here, that the transfer of credit was null and void due to the plaintiff’s lack of registration in the register of financial intermediaries pursuant to art. 106 of Legislative Decree 385/1993 (the so-called consolidated banking law).
The transferee appealed against the decision of the Justice of the Peace, which had concluded the case in favor of the airline. At the end of the second level of judgment, the Court of Busto Arsizio overturned the decision of the Justice of the Peace, thus condemning the airline to pay the amounts requested.
The airline, having lost on appeal, then appealed to the Court of Cassation on the basis of four grounds. Most relevant to this case, the appellant challenged the ruling insofar as the Court had rejected the objection of nullity of the credit assignment contract entered into between the assignee company and the two beneficiaries of the compensation. More specifically, the airline complained that the Court should have classified the credit assignment as a purchase for consideration of credits subject to the provisions of art. 106 of Legislative Decree 385/1993 and art. 2, paragraph 1 of Ministerial Decree no. 53 of 2 April 2015, which requires, as already mentioned, the registration of the assignee for consideration in the relevant Register kept by the Bank of Italy.
The Court of Cassation considered this reason unfounded, specifying that for financing activities to take place (from which the obligation to register in the Register arises) “an assignment of credit in which a party is a person who operates towards third parties in a professional manner is not sufficient, but it is necessary that such assignment integrates the provision of financing, that is, that it involves the provision of money or other benefits”.
From the content of the contract in question, the Supreme Court has in fact concluded that the transaction in question was not characterized by the purpose of financing since “ the giving of money by the assignee to the assignor is only eventual ” (conditional on the successful collection of the assigned credit) and, in any case, even where the assigned debtor actually fulfills “it is always subsequent to the successful collection of the assigned debt”. In other words, the Court of Cassation has outlined a hypothesis in which, even if there is an assignment of the credit, such assignment does not fall within the reserve of activity provided for by art. 106 of Legislative Decree 385/1993.
Therefore, the appeal, for the reasons set out above and for the further reasons not expressly mentioned, was rejected and the assignment of the credit for compensation for flight delay was deemed valid.
