Goods in Transit: Italian Imports, Exports, and the Lex Situs at the Moment of Transfer

When a UK manufacturer sells goods to an Italian buyer — or when an Italian exporter ships products to a UK distributor — a question arises that most commercial practitioners overlook: at what precise moment does title to the goods pass, and which law determines that moment? The answer can mean the difference between retaining ownership during a buyer's insolvency and losing the goods entirely to a foreign creditor.

The Doctrinal Foundation: Dicey Rule 141

The conflict of laws framework for the transfer of tangible movables is stated in Dicey, Morris & Collins on the Conflict of Laws (15th Edition) as Rule 141:

"The validity of a transfer of a tangible movable and its effect on the proprietary rights of the parties thereto and of those claiming under them in respect thereof are governed by the law of the country where the movable is at the time of the transfer (lex situs)."

This rule is absolute for the proprietary effects of the transfer — i.e., the question of whether title has actually passed. A distinction must be drawn between the contractual effects and the proprietary effects of a transfer:

Contractual effects: governed by the law applicable to the contract (determined by Rome I Regulation or by choice of law). These include the obligation to deliver, the seller's liability for defects, the buyer's obligation to pay, and the availability of contractual remedies.

Proprietary effects: governed exclusively by the lex situs at the time of transfer. These include whether title has passed, whether a security interest has been created, the priority of competing claims, and the rights of third parties.

This distinction is critical. A contract governed by English law may validly oblige the seller to transfer goods, but whether title actually passes depends on the law of the country where the goods are situated at the relevant moment.

Illustration from Dicey (25-006)

"A contract made in England and governed by English law for the sale of specific goods situated in Germany, although it would be effective to pass the property in the goods at the moment the contract was made if the goods were situate in England, will not have that effect if under German law delivery of the goods was required in order to transfer property in them."

The same principle applies to Italy. Italian law (Article 1376 of the Civil Code) provides that in a contract of sale, title passes by consent (consenso traslativo) — at the moment the agreement is reached, without the need for physical delivery. But for unascertained goods, title passes only upon individuazione (identification) of the specific goods (Article 1378). If English law governs the contract but the goods are in Italy, the Italian lex situs determines the proprietary effect.

The Transit Exception: Rule 142

When goods are in transit — moving between countries by ship, air, or road — their situs at any given moment is "casual and temporary and not contemplated by or known to either party to the transfer" (25-017). Requiring compliance with the lex situs of the goods at an unknown interim location would be impracticable.

Rule 142 addresses this:

"A title to a tangible movable acquired or reserved in accordance with the law applicable to the transfer is valid even if it is not recognised by the lex situs at the time of the transfer."

This exception applies only in the positive direction — it validates a title that was acquired under the applicable law, even if the lex situs would not have recognised it. It does not invalidate a title that the lex situs would have recognised. The exception has a limited scope:

It applies only when the goods are genuinely in transit, with their situs casual and unknown to the parties It does not apply when the goods have come to rest at a definite location It does not apply to the means of transport themselves (ships, aircraft) It does not override the lex situs once the goods arrive at their destination

Retention of Title: The Cross-Border Collision

The English Position

Under English law, a retention of title clause (also known as a "Romalpa clause" after Aluminium Industrie Vaassen BV v Romalpa Aluminium Ltd [1976]) allows the seller to retain ownership of goods until full payment is received. Title does not pass to the buyer at the point of delivery but remains with the seller as a form of security.

Retention of title is a proprietary arrangement — it affects who owns the goods. It is not merely a contractual term. Under English law, a simple retention of title clause (reserving title to the goods themselves until payment) is effective without registration. More complex clauses (claiming title to proceeds of sub-sales or to mixed or processed goods) are treated as charges and require registration under the Companies Act 2006.

The Italian Position

Italian law recognises riserva di proprietà (retention of title) under Article 1523 of the Civil Code. The buyer acquires ownership only upon payment of the final instalment. Until that point, the seller retains title.

However, there is a critical difference: under Italian law, the retention of title clause must be evidenced by a document bearing a data certa (certain date) — typically notarisation or registration — before the goods are delivered to the buyer. If the seller fails to establish a data certa prior to delivery, the retention of title is valid between the seller and buyer but is not enforceable against third-party creditors of the buyer (Article 1524).

This is the cross-border collision. A UK seller relies on a simple English-law retention of title clause. The goods are shipped to Italy. The Italian buyer goes into insolvency. The UK seller claims ownership of the goods. The Italian insolvency administrator (curatore fallimentare) challenges the claim: under Italian law (the lex situs of the goods at the time of the insolvency), the retention of title was not registered with a data certa and is therefore unenforceable against the creditor pool.

Result: the UK seller loses their goods to the Italian insolvency estate, despite having a valid retention of title clause under the governing law of the contract.

The Conditional Sale Paradigm

The collision intensifies with conditional sales. Dicey discusses "Paradigm A" (25-030):

B buys goods in country X from A under a contract which provides that title will not pass to B until the price is fully paid. Before B has paid for them, B removes the goods to country Y and there sells them to C, representing that B has full title. C takes the goods in good faith.

Under common law (nemo dat quod non habet), C acquires no title — A retains ownership. Under Italian civil law (Article 1153), C — as a good-faith acquirer in possession — acquires valid title, defeating A's retention of title claim. The two systems produce opposite results.

If the goods were sold in the UK under an English-law retention of title but subsequently moved to Italy, the Italian lex situs determines the proprietary outcome. The Italian good-faith purchaser from the buyer prevails.

Practical Framework for UK Sellers to Italian Buyers

The following table summarises the key considerations:

| Issue | Governing Law | Practical Requirement | |:|:

Authority Notes

The transfer framework is stated in Rules 141–142 of Dicey, Morris & Collins on the Conflict of Laws (15th Edition), Chapter 25. The Italian PIL confirmation is found in Article 51 of Law 218/1995 (lex rei sitae), which governs proprietaryeffects when goods arrive in Italy. The convergence is important: both the English (Rule 141) and Italian (Art. 51) systems designate the lex situs as the exclusive authority for proprietary questions, including retention of title and good-faith acquisition. Italian domestic provisions are in Articles 1376, 1378, 1523–1526 (retention of title), and 1153 (good-faith acquisition) of the Codice Civile.

[!TIP] Authoritative Links: For more on the situs determination that triggers these rules, see our note on Movable or Immovable? The Hidden Classification or Assignment of Italian Debts and Receivables.